Everything Finance

Unless you’ve been living under a rock for the past 2-3 years, you may be aware that a large number of businesses are suffering from the recession sparked by the mortgage lending crisis.  With the trickle-down effect, even small businesses are starting to feel the crunch.  For this reason, many companies have had to look for help to stay afloat until the economy turns around.  But taking a loan may not be the best option for everyone.  Loans, even for once-profitable businesses, can be difficult to secure these days with lenders having become notoriously cautious and more often than not, pulling the purse-strings tight.  And flagging credit ratings can make the situation even direr for businesses on the brink of failure.  So there are several things you may want to consider before you opt to take out a loan.

It pays to know that there are many options available for the business that needs a bit of a boost to keep operations up and running.  A bank is not the only place to get a loan.  Friends and family may be willing to lend a hand and they are often willing to do so for low or no interest and without even a monthly schedule for repayment.  In any case, they are a lot more likely to be flexible when it comes to dates and amounts, whereas a bank demands payment when due and has the ability to levy fines or foreclose should you fail to meet your contractual obligations.

A good option is a merchant cash advance.  This is an excellent way for businesses that have terrible credit but high potential (and a rapidly growing monthly income) to secure the lump sum they need to upgrade, make repairs, or simply take their business to the next level.  A merchant cash advance is not a loan, and therefore the interest can be astronomical, but the way it works makes it worth considering.  Rather than collecting a set monthly payment that includes interest, creditors will take a percentage of earnings, so that if your business has a bad month, you won’t have to pay as much.  In other words, it operates on a sort of sliding fee scale.  Of course, the quicker you pay it off, the less you’re going to end up paying (since their rates are generally in the neighborhood of 30%).

About Tushar Mathur

Tushar Mathur has been blogging about Personal Finance since January, 2007. This has helped him recognize what topics readers like and relate to. The goal is to spot good news-worthy info and get it out to the public as soon as possible.Tushar Mathur maintains this Personal Finance blog called Everything Finance. The blog articles fall under these categories: Investing, saving money, shopping, blogging and making money online.