Business is entirely a career of its own, yes it’s a career and I will tell you why. The word business is relative to many people; a lot of individuals when asked perceive business from different angles. In a general term or what is taught in school, “A business is just buying and selling of goods and services with the sole aim of making profits.” As simple as it sounds, I can tell you that the world of business is more than just buying and selling; it involves lot of things. It has to be planned, consider a lot of factors before deciding to go on the journey. Starting up a business as a new individual can be very hectic, even if you have studied a lot about the business. This is because things change over time and there always improvement and advancement of things that you as a new business owner might not have heard. For a lot of people, the primary headache in business is startup capital because frankly speaking, everybody wants to have a full-scale business that runs in thousands of dollars irrespective of if they even have a clue on how the business is being managed or not. Well, I guess this is because it is in human nature to always aim big in whatever we are venturing into. Now the big question before nurturing any idea of business is how to get capital for whatever business you want to venture into; the list of sources will be springing on any individual mind especially if one falls a victim of credit card rejection. In this article, we are going to be looking at another alternative to get startup capital for any business if a loan is what you have settled for. The process of obtaining this loan will not be easy because they are a lot of criteria that must be met before being granted the loan. So let us get started.
Different sources of business capital
There are many ways one can source for business capital, these sources have their own advantage, disadvantage, requirements and investment goals, so it is always advisable to look into them thoroughly before deciding on which to use. These sources fall into two main categories: equity financing, where the money is invested in your business in exchange for part ownership and debt financing, which essentially means you borrow money and repay it with interest. The various ways of getting capital for business from these two sources are:
Sources of Debt Financing
- Commercial Banks
This is loans that are gotten from commercials banks; smaller companies are much more able to get attention from a commercial loan officer after their startup phase has been completed.
- Commercial Finance Companies.
Stats have it that many people that went seeking a loan from a commercial bank and get rejected turns to commercial finance companies. The sad side of using commercial finance companies is that these companies usually charge higher rates than other lenders.
- Leasing Companies
These are companies that don’t usually provide loans, but they provide assets, accessories, and equipment needed in the business.
- State and Local Government Lending Programs
These are loans given by states and local governments to individuals who have the zeal to start a business. These loans aim at developing the state and its environment.
- Trade Credit and Peer to Peer (P2P) Lending
This is a peer to peer lending platform where members donate to a fellow member to help foster his or her business growth.
Sources of Equity Capital
- Private Investors
These are set of people with money looking to grow business so long as the business plan looks promising.
- Institutional Venture Capital Firms
For a lot of people, this is the best source of equity capital for business. They are a group of organized pools of venture capital that help create a fast-growing high-tech industry and Silicon Valley.
- Strategic Investors and Corporate Venture Capitalists
These are a group of investors that look for the individual who is seeking funds to start a business similar or the same to theirs.
- Overseas Investors
These are top millionaires and billionaires who are ready to help businesses in a well-governed country like the US.
The above are the method, now let us look at the best alternative which is under the business loan, it is called a merchant cash advance.
What Is Merchant Advance Loan
What happens when your business loan is rejected because of a credit card. Do you know there is another alternative? Yes, there is and it is called cash advance loan. A merchant cash advance (MCA) is thus a form of financing that allows a company to sell a portion of its future sales in exchange for an urgent, immediate payment. This financing provides an enthusiastic business owner with funds to pay the expenses required to make the business grow. The method to use in repaying this loan depends on the agreement documented. This is to say there are many ways in which the loan can be repaid. It is good to note that most cash advance companies consider their transactions to be a purchase of future sales and not just a loan. In a bid to determine how much funding to provide to the business, many finance companies would review the business commercial sales, credit card sales, bank statements and other information. These reports give them the sales performance information which is necessary because it gives an idea of your future sales potential.
A cash advance is the best alternative for people seeking to start business new; it is because the course of achieving this type of loan is not stressful and full of paper signings unlike the other methods of business loans listed above.