1 Maiden Lane Floor #7, New York, N.Y. 10038
(212)381-9349/ (347) 884-2635/ (347) 813-9943
Getting a business loan can be a challenging process, and there are several problems that business owners may encounter. Some of the most common issues include:
Poor Credit History: One of the biggest hurdles to obtaining a business loan is a poor credit history. If a business owner has a low credit score, it may be difficult to qualify for a loan, and if they do, the interest rates and terms may be unfavorable.
Insufficient Collateral: Many lenders require borrowers to provide collateral to secure the loan. If a business owner does not have sufficient assets to put up as collateral, they may be unable to secure a loan.
Limited Cash Flow: Lenders want to see that a business has a steady stream of income and is able to make timely loan payments. If a business has limited cash flow, it may be difficult to convince a lender that they are a good risk.
Lack of Business Plan: Lenders want to see that a business has a solid plan for growth and profitability. If a business owner does not have a well-thought-out business plan, it may be difficult to convince a lender to provide a loan.
Industry Risk: Some lenders may be hesitant to lend money to businesses in industries that are considered high-risk, such as start-ups or businesses in volatile industries.
Existing Debt: If a business already has existing debt, lenders may be hesitant to provide additional loans, especially if the business is already struggling to make payments on its current debts.
Unstable or Inconsistent Revenue: If a business has unstable or inconsistent revenue, it may be difficult to convince a lender that the business will be able to make timely loan payments.
To increase the chances of obtaining a business loan, it is essential to address these issues and work with lenders who specialize in small business lending. Additionally, preparing a strong business plan, improving credit history, and securing collateral can all increase the likelihood of obtaining a loan.
Eligibility requirements: Merchant cash advances may be easier to qualify for than business loans, particularly for businesses with poor credit or limited financial history. However, this ease of access may come at a higher cost.
Use of funds: Business loans may be used for a wide range of business purposes, while merchant cash advances are typically restricted to working capital needs.
Ultimately, whether a merchant cash advance or a business loan is the better choice for a business depends on the business's individual circumstances, including its creditworthiness, sales history, and financing needs. It's important for businesses to carefully consider the costs and repayment terms of both options before making a decision.