Most business owners look for business funding via three places. Firstly their bank, which is the obvious place to start. Business owners place trust in the bank and their judgement of receiving a fair and trusted option from a face to face contact. Secondly, a family member or friend.
Often the first place to start for many. The issue with this route that if, in the event of things becoming tight can lead to relationship stress. Thirdly local government, local county council and national government-backed funding initiatives.
These government-backed funding routes are however a little thin on the ground. Business owners have more choice than three options. With the rise of alternative business funding, the choices for business owners is now broader than ever.
Banks are also trying to reposition themselves into this market because of the simple fact that many of these new innovative funding products offer a better, quicker and more affordable option.
Take for example our merchant cash advance product. Unlike a bank loan where your repayments are a set value each month, a cash advance allows you to repay as and when your business makes sales.
A business can raise funding very quickly to the value of their current credit and debit card payment turnover.
When a customer makes a payment on a product or service via a card transaction a small amount is paid back to the funder.
5 Points to remember when raising capital for a business
It’s important to remember some simple points when looking for a working capital loan.
1. Shop around – there are hundreds of choices available for businesses in the UK and not just from your bank.
2. Look to receive competitive quotes and compare – even if you compare to a bank loan.
3. Don’t go for the largest amount possible. This will spook many lenders. You’re better off applying for a smaller amount and showing repayment loyalty for future top-ups.
4. Get any paperwork together. Some lenders need 3+ months credit card statements as a minimum. Good to get these to hand.
5. Use a brokerage for raising capital for a business. Many customers like to apply direct thinking they may get a better deal. The reality is a good brokerage will know the best product fit for your business and receive ultra competitive quotes on your behalf. Check they don’t charge you any brokers fees.
Things to watch out for when raising capital for a business.
1. Hidden fees. These can often catch out a business owner especially in the small print.
2. Time to obtain the funds into your account. You may need cash quickly. Check with the funder on the lead time drawn down from the approval stage. Your application will usually be sent to an underwriting team to validate eligibility and affordability. There can be varying timeframes with each lender.
3. Credit checks. Check to see if the lender performs any checks that may leave a footprint on your history.
Above all else make sure you find the right product fit for your business. More and more business are using they need. At MLA we make the process of obtaining a merchant cash advance for business owners easy and most importantly competitive.