Starting A Small Business? Choose The Right Mode Of Finance

Starting A Small Business? Choose The Right Mode Of Finance

A small business is like a budding plant– it needs to be nurtured in order to flourish. Just as a budding plant needs to be watered and manured well enough to facilitate its growth process, a small business needs to have an adequate financial back up for it to grow and become a larger concern in the coming years. Proper financing at the grass root level is essential for a business to prosper.

Starting a new business venture needs proper capital planning. To get the requisite start-up capital, entrepreneurs often depend on the general loan schemes offered by various banks and financial institutions. These institutions evaluate the credibility of a loan seeker on the basis of their credit score, available collateral and their financial standing. These loans would also come with a host of strict terms and conditions. Small business entrepreneurs often find it difficult to meet the qualifying requirements for a loan and abide by the stringent terms and conditions. In most cases they will either have to settle for a loan with very high interest rate that results in higher financial burden in the future or will have to look for other cash sources to fund their business. Choosing the right financing solution is one of the prime determinants of the success of a small business.

Finance in the form of loans is of two types – Secured and unsecured. A secured loan is essentially backed up by a collateral or a security on the condition that in the event of the applicant failing to repay the loan, the financial institution has the right to seize the collateral and sell it off to get their money back. An unsecured loan, unlike that of a secured loan does not demand a security or a collateral from the borrower. Due to a lesser degree of risk associated with the lender, a secured loan charges a lower interest rate than that of an unsecured loan. The borrower nevertheless has to make repayments on a monthly basis under both the types.

Of all the available financing options, an entrepreneur should ideally look for a scheme that offers quick processing of the loan, is flexible and more importantly has a less burdensome repayment plan. Besides the various loan offers available in the market, business cash advance satisfies all these conditions to the maximum advantage of small business owners. A business cash advance is one such scheme that makes the very word “business” seem comfortable to the budding entrepreneurs. Unlike loans, a business cash advance neither demands a security or a collateral and at times they are offered even to borrowers with not so good credit ratings. The characteristic that works very well in the favor of the borrower in case of a cash advance is its repayment plan. Unlike other forms of loans, a business cash advance does not have a fixed monthly repayment plan. In this case the repayment is directly related to the frequency of sales through Visa or Master card i.e. the lender gets their money back through the future credit card receivables of the borrower.

Powered by the above benefits, a business cash advance [] provides a strong financial foundation to a small business. Opting for a business cash advance surely helps the budding entrepreneurs to grow and take their enterprises to the next level of prosperity.

Leave a Reply