Alternative Financing Strategies In A Slow Market

The economy just struggles on. And, it is expected to continue at least until the next Presidential election is over and we set politics aside and get back to the real work.

In the mean time, current financial market conditions will remain unchanged - meaning that small businesses, even those that are growing, will continue to have a hard time accessing capital.

- Credit score requirements will trend higher precluding those without the most stellar score from the credit markets while continued economic setbacks of small business owners will push their scores in the opposite direction.

- Positive cash flow requirements will play an even greater role in credit underwriting even while most small businesses are facing declining revenues.

- And, collateral requirements will continue to trend higher; with values of 100%, 150% and even 200% or more.

All bad news for business owners needing a business loan to stay float or to grow and innovate their companies through this turmoil.

However, not all is lost to these entrepreneurs.

Here are a couple of suggestions of raising money during this unending slow market:

Are Cash Advances Smart Loan Alternatives For Businesses?

Many businesses are struggling in the current economy; due to the relentless recession and irresponsible lending habits of major lenders over the past few years, banks have tightened up on loan lending. Looking to avoid another market crash, such as that which has persisted for the past five years due to the banker's faulty home loans, government agencies have installed more regulations on lending practitioners. This is good news for the country, as it helps to protect home buyers and other borrowers from fraudulent or faulty loans, but it can be bad for business owners, who often need loans to keep their companies afloat.

Business owners often rely on bank financing to cover costs, which may lead them to seek out loan alternatives when unable to secure a traditional loan, including high interest cash advances or other loans which can perpetuate a cycle of loan dependence. Often, business owners barely break even after all the bills are paid, potentially leading to the loss of one's business and possible bankruptcy. For business owners who can't obtain traditional loans, cash advances may provide the needed funds temporarily. However, they are not the only option.

When a traditional bank loan is unattainable, the following list of alternative finance options for businesses might come in handy, including Merchant Cash Advances, Non-Bank Loans, Asset Based Lending, and Lease Backs:

*Merchant cash advances providers loan a lump sum amount to a business and collect the repayment by means of abstracting a percentage from daily credit card sales until the loan plus a predetermined fee is paid in full. On the plus side, merchants do not have to pay back the fee in a lump sum, making payments more manageable. On the con side, these advances have high interest rates and often take a long time to pay off, accruing fees over the length of the loan.