Which Funding Product Fits Your Business?
Almost all business funding is good, but sometimes, depending on whatever you wish to use the money for, one product can be a better option than the other.
Many other factors such as your business type, current financial situation, urgency, ease of settlement, and loan arrangement may also deem one type a wiser choice than the other.
For instance, when short on business finances and can’t guarantee a steady income, it makes more sense to get a quick merchant cash advance and have it deducted from your daily credit card sales than commit to a bank loan that will take forever and still add extra financial pressure at month-end.
Because an array of products can be confusing, we compiled a list to help you pick the right product.
- Your Business Takes Credit Card Payments: Merchant Cash Advance
An MCA is a quick way to acquire funding to meet various needs as long as your business takes credit card payments.
Card transactions matter because repayments rely on daily deductions from your credit card income.
A lender gives you an instant lump sum and deducts it from your daily credit card sales. The good thing, you pay more during peak sales and less when sales plummet.
MCAs charge a factor, and not interest rates, as in business loans. And while some can be as high as in the three-digit, the right product can be a lifesaver.
- Purchase Equipment: Equipment Financing
The holiday season is here; what equipment do you need to get your business ready? Equipment financing works best for such needs. Some lenders offer up to 100% financing.
However, the equipment only remains yours provided you continue making repayments and maybe ceased once you stop or act outside the contract.
- Manage Cash Flow Problems– Business Line of Credit
A business credit line is an excellent choice to survive a cash flow crisis. It gives access to a lump sum for a specified time period. This amount is repaid with interest, and once complete, you get instant access to another round.
But while considered the haven for cash flow problems, credit lines can come with high-interest rates and, sometimes, collateral requirements.
- Acquire a One-time Loan and Repay in Monthly Installments: Term Loan
Traditional business loans fit all business purposes. The term can last anywhere from 1 to 5 years.
On the flip side, they take longer to process and require good credit and steady income to guarantee per-month payments.
Remember, loan terms may differ from lender to another, so it’s essential to read between the lines before entering any agreement.
Don’t hesitate to research and consider other options like SBA loans, invoice financing, etc., if these products don’t match your needs.
Author Bio: Michael Hollis is a Detroit native who has helped hundreds of business owners with their business loans. He’s experimented with various occupations: computer programming, dog-training, accounting… But his favorite is the one he’s now doing — providing business funding for hard-working business owners across the country.
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