Running a business is not an easy task and requires a lot of efforts and a right amount of funds to cover the contingencies. Raising funds for companies has become more difficult for small businesses with the stringent rules that commercial banks have in place. Even if the business manages to qualify for the loan, the approval and processing may take a few weeks up to a month. With the uncertainty of availing quick business loan funding, many small businesses are not able to exploit the opportunities available for them to grow and expand due to lack of sufficient funds. Seasonal businesses and high-risk businesses are often have their business loans turned down by banks and commercial institutions due to a lack of fixed, regular income.
The uncertainty in regular fixed income is preventing small businesses from repaying loans availed from banks resulting in bad credit. Having a bad or average credit makes things more difficult and often result in disapproval of a loan. Non-bank lenders introduced quick business loan funding to small businesses to encourage them to do better business in order to earn and prosper. The business loans from non-bank lenders aim at providing required funds to meet the day-to-day business expenditure and to help business owners to invest and expand the business operations. The business loans can be used for any business purpose unlike loans from commercial banks that need the owner to specify the use.
Small business loans offered by non-bank lenders are similar to that of the loans offered by commercial banks and financial institutions. They provide you funds when you need and charge interest on the amount advanced. The loans advanced by commercial banks are mostly secured by collaterals to prevent loss when the loan is defaulted by the borrower. However, quick business loan funding by non-bank lenders can be categorized into secured and unsecured.
A secured business loan is available for businesses that own property or any other fixed asset to place against the cash advanced. Business loan against fixed assets of the firm should be considered as last resort of funding as there is a risk of repossession. The risk for lenders is negligible, and the loan is backed by the collateral. The secured business loans attract low-interest rates as the risk involved is less.
The unsecured business loan makes the best business funding loan for business owners with no assets to fund the loan. The lending risk is high for the lenders, and there is no back up for the funds advanced if the borrower defaults the loan. Interest rates are high on the unsecured business loans due to the high risk involved. However, the approval rate may not be high for borrowers with bad credit. Fortunately, Merchant cash advance (MCA) is an unsecured business loan that can be availed by businesses with bad credit easily. The cash is advanced based on the sales turnover of the company and is recovered as a portion of sales on the daily or monthly basis. A MCA can be applied to online, and the approval rate is high as the loans are advanced based on the sales forecast for the company.