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| Small Business Administration Loans vs. a Cash Advance from MCA |
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Many new businesses as well as existing businesses consider Small Business Administration (SBA) loans to help capitalize, expand, or recover from a loss.
But, before applying for SBA loans there are a few facts you should be aware of. The Small Business Administration is not truly a lender. They guarantee loans made to small businesses that would not be eligible for a loan without this guarantee. In fact, if a company were eligible for a loan at a reasonable rate from a banking institution, then the mall Business Administration would in all likelihood refuse to guarantee the loan. Another fact to be aware of is that Small Business Administration loans are not fully guaranteed by the SBA. The bank loan is partially exposed. The chief consequence of this is that the bank will now do due diligence to see that the company seeking SBA loans has the financial wherewithal to repay the debt. This can be somewhat problematic, as we will discuss later.
The SBA has some very complex regulations concerning Small Business Administration loans and who may apply for them. Some considerations include: how large the company is, number of employees, and the type of business they are in. Furthermore, certain businesses have additional restrictions. Some cases, which involve additional complications, include businesses owned by foreigners, companies undergoing a change in ownership, fishing boats, and medical facilities. The SBA does not permit certain entities to successfully apply for Small Business Administration loans. Among these are nonprofit companies, people engaged in illegal activities, gambling companies, and real estate investment companies.
Typically, the SBA strictly limits what Small Business Administration loans may be used for. Generally speaking the following are permitted: new commercial construction, renovation or expansion of an existing facility, purchase of capital equipment or land or buildings, and expanding working capital. In no case will the SBA guarantee Small Business Administration loans for what it deems to be a poorly thought out business venture, repayment of delinquent taxes, or to facilitate an ownership change for the business that will not create a benefit for the company.
Those considering applying can go to the government website for the Small Business Administration and begin wading through the myriad regulations and hope you find all the ones pertaining to your company when you make your application. The first step in making an application for a Small Business Administration loan is to gather all your financials together. This can be a time consuming chore in itself. Personnel and resources presently taking care of taxes, billing, and payroll will have to gather all the documentation. When the books are in order, the bank will want to see them to determine the risk in making the loan to your company. The second step in making an application for a Small Business Administration loan is to put a comprehensive business plan together. Even if you use one of the software programs to help you create this document, it will still require a number of man-hours to complete. It must be done correctly in order to get the loan, and because of the sensitive nature of the financial information, the top people in the company will be the ones producing the business plan. This will take their time away from other projects. The business plan will detail the money required, how it will be used, how it will benefit the company, and most importantly, how it will be repaid.
After these prerequisites are complete, business owners then schedule a time to meet with the banker who will review them. The bank will then evaluate the materials internally and let the owners know if the loan is processing. Eventually as a business owner, you will receive an answer to whether you will receive the loan or not. Depending on the nature of the loan, quality of the risk, and if additional documentation is required, you may find it could take weeks to months before you get a check.
By no means, are SBA loans are not speedy solutions to acquiring money. But, for those business owners who are looking for an excellent alternative to SBA loans there’s Merchant Credit Advance.
Merchant Credit Advance helps small to medium sized businesses obtain working capital for their company. Business owners will typically be able to obtain a cash advance between $5,000 and $150,000.
In huge contrast to SBA loans, it is much easier to apply for a cash advance from MCA. This is because no collateral is needed, perfect credit is not necessary, and no work history is necessary. Other benefits of a cash advance with MCA include: no fixed payments, no late fees, and no fixed repayment period. Instead, a portion of the credit charges run through your company is diverted to the MCA. The usual contract has a fixed percentage of the credit card charge that is applied to the debt and the percentage may not be changed without your permission.
Call 800-503-1146 today to learn more about the difference between a cash advance with MCA and a SBA loan!
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