Where to Quickly Obtain Small Business Loans For Your Restaurant

Restaurants have gained an unwarranted status for being extraordinarily prone to dissolving, making it excessively hard for promising restaurateurs to obtain restaurant financing. Even if the urban fable expresses that just 10% of restaurants triumph, the reality is that about 40% of them are remaining open beyond five years, a statute in tune amidst every other new establishment type. Regrettably, that doesn’t end the awareness from interrupting on your financial backing.

When you take possession of a restaurant you habitually notice yourself in crucial need of immediate financing for extensions or additional expenditures. We all understand that financial institutions are famous for their procrastinating procedure and their excessive level of refusals, specifically in our present-day financial atmosphere. It is encouraging to see that there are additional ways of obtaining capital that you may examine.

Establishments that offer cash advances for restaurants are more than disposed to assist you uncover an ironclad approach to your capital bind. With cash advance commitments offering anywhere from as mere as $5,000 to values of $200,000 or above, it can honestly create an important difference to your company.

Using small business loans from your merchant account corresponds to the corporation selling a section of their estimated future credit card income in exchange for currency right now. As time passes the advanced currency are paid back as a set percentage of the monthly credit card proceeds.

There are ample benefits to receiving commitments for small business loans based on your credit card transactions. To begin with, the turn time on approvals usually requires no more than a day. The capital is at hand in 7-10 days. Restitution terms are easy, as they are correlated directly to your credit card transactions. This entails that on a lagging month you spend a lower amount on an incredibly vigorous month, you pay a little extra. Eventually, for a new company, a smaller amount of stern necessities for approval may impressively promote the chances of acquiring the much desired cash resources.

The Truth About Business Loans and Merchant Cash Advances – Part 2

Bank funding versus private funding. You may be asking yourself, “What is the difference?” Well, a better question to ask is, “Which type of funding will help me obtain my business goals with the least risk in the shortest time?”

The broad answer to this question is, the difference depends on your business needs. Let’s face it, every business owner has an end goal in mind. People go into business for one reason and for one reason only, regardless of their “WHY” or passion and purpose. It’s to do one thing and that’s to… profit!

“How do you increase your profits in a period of time?” is where we need to focus. This is where your company’s specific needs should be determined, so you can realize your gains in the short or long term.

Let’s get right to it, starting with bank funding. The obvious difference between bank and private financing is that banks must follow the federal government guidelines. Few of the guidelines necessary are in place to protect the consumer, which is completely understandable. However, the rest of the guidelines are to protect and preserve the bank’s position on very loan at the expense of the public, courtesy of the Federal Reserve (a non-government agency).

Although, I won’t get into the “Fed” in this discussion, the main issue with bank business loans is that they are too restrictive for the borrower. First, take a look at the documentation required. It all starts with extremely good personal credit which we will discuss later. Your banker will also require 3 years of previous income statements and balance sheets, 2 years of projected income statements and balance sheets and 3 years of your personal & business tax returns. There is even more required that I won’t mention!

Additionally, bank and credit union guidelines are solely based on credit-risk, asset or collateral-risk lending which may seem to make sense on the surface; however, what does this mean? It means the borrower is at maximum risk.

“Why?” you ask; because banks (and other institutions) basically only offer 3 underwriting lending products to service clients. Sure, they call their loans by different names, loan amount limitations, and package these finance programs with extra bells and whistles to make them seem better than they are. In fact, their financing schemes only cover up the real risk involved.

If the business borrower for whatever reason can’t make the required payments, then he is at risk of losing his personal credit, including his assets, such as the real estate the business occupies (if owned by the borrower); as well as any collateral held against the loan, like the company equipment or vehicles. A loss like this could lead the borrower into a long term detrimental situation that could be nearly impossible to recover from.

Your greatest risk as a small business owner is committing to long-term financing. We have all seen or experienced this calamity in the housing market in 2008. No one can foresee the future, however we do know this for sure, every market and industry operates in cyclical patterns, so the longer you are exposed to the risk, the greater chance that something devastating will happen.

By no means am I pessimistic. I am just aware of the deceptive practices that these institutions count on the public to believe. Keep in mind, when considering bank financing the 3 lending practices that bank & credit union institutions use that create the most risk to you, the consumer are the following:

  • Asset Based Lending
  • Credit Based Lending
  • Collateral Based Lending

Conversely, in part 3 we will discuss some of the pros and cons of private funding in comparison to bank financing in the next upcoming article.

Is The Traditional Business Loan Gone Forever?

For those CEOs with awful credit, merchant loans could be an essential component of operating costs. The primary gain of utilizing credit card factoring as opposed to a business loan is it will finance wanted purchases and the known fact that there really is no restriction set as far as what your business are allowed to obtain. The cash can be applied to get equipment, touch up or refashion a storefront or even pay off your taxes.

As one could suspect, factoring contains more expensive interest rates than those provided through a more institutional supplier, primarily your conventional bank. This means that over the life of the loan, you may pay more for the benefit of quick access to money and a lesser amount of burden. On the other hand, for those who get these alternatives to a business loan, the repayment rate is typically connected directly to your company’s credit card numbers of the month, thereby eradicating unease over your establishment not selling enough to make the monthly payment and keep up with your other business bills.

Additional advantages for the entrepreneur attaining capital by taking advantage of bad credit business loans consist of:

– No collateral required
– No processing fees to create the deal
– No restrictions on the utilization of the working capital
– No set repayment schedule
– Speedy processing
– Top Tier approval rate

While bad credit business loans may offer capital selections to a larger number of entrepreneurs, there are some somewhat specific conditions needed in order to get approved. Each advance company consists of different conditions, but the following are the norm.

– The merchant must have been in business for 6 months to a year

– The merchant must have at least 6 months of credit card processing with a stated minimum amount of credit card business monthly

– The merchant must have a verifiable lease that will last for at least one additional year

– The funding company may require the transfer of all credit card processing to their machines

– The business type must be acceptable and legal