What other options do I have?

The merchant cash advance is just one of many business-funding options that are available to small business owners. Others include bank loans, venture capital, equipment leasing, and SBA loans.

Bank Loans

Through banks, small business owners can get business cash, which can be used to startup, maintain or buy a business.

Most banks will require excellent credit scores, sufficient collateral and sound business plans, before approving an application. Bank loans are typically repaid via fixed monthly payments and interest must be paid on these loans.

Venture Capital

When business owners choose to work with venture capitalists, they receive the luxury of having funds invested into their businesses and the opportunity to receive “managerial and technical expertise” from the venture capitalists. This combination can be very beneficial for a new business owner.

Venture capitalists usually charge higher interest rates since they are willing to take on riskier business ventures than most banks.

Most venture capital firms focus on a particular industry. Therefore, you should find a firm that specializes in the industry to which your business belongs.

Equipment Leasing

Rather than getting business cash to purchase equipment, equipment-leasing companies provide you with the equipment and charge you a monthly fee to use it. Often, after you've made a certain number of payments, the equipment leasing company will give you the option to purchase the equipment.

SBA Loans

SBA loans are typically administered through banks, but unlike ordinary bank loans, they are backed by the Small Business Administration. This means, The SBA guarantees a portion of the loan, should the borrower default.

SBA loans requirements include:

  • Business must operate for profit
  • Business must be engaged in, or propose to do business in, the United States or its possessions;
  • Business must have reasonable owner equity to invest
  • Business must use alternative financial resources first including personal assets.

There are certain restrictions on how SBA loans can be used, for complete guidelines, please visit the Small Business Administration's website.