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The vast majority of business cash advances are unsecured; however, secured business cash advances are also available. They will generally provide less risk to the company issuing the advance, which in turn will translate into a lower cost offered to the end user. Remember to ask your Business Cash Advance provider for policy information regarding their Secured Cash Advance program.
Compare the Unsecured Cash Advance to other Financing Methods
A business loan from a bank is the traditional method for obtaining funds for your business needs. However, in this section we will examine another major method and one emerging trend in business financing.
Peer-to-peer lending is an emerging lending vehicle where one or more individuals will lend money directly to another individual or company with a bank acting as only the facilitator. Peer-to-peer lending is based off the business model of the Internet auction. Individual lenders will browse loan requests and bid on them. Essentially they will offer funds at a rate they find comfortable after reading the loan request description. The loans are unsecured. Individuals seeking a loan will post their loan request including the amount of interest they are willing to pay, for what they intend to use the money, and their payback schedule.
IMPORTANT DEFINITION
Liabilities: The amount owed by a business or an individual, excluding ownership equity. There are two types of liabilities: Current and Long-term. Current are debts which must be paid within one year (such as accounts receivable, dividends, notes payable, bank loans payable, taxes payable, wages and long-term debt due within one year). Long-term liabilities, also called funded debt, are debts that are not due until after a year's time. |
Proponents of peer-to-peer lending believe that this is the future of lending because it lowers the costs by removing the loan officer and loan approval process as the middlemen between the investor with cash to spare, and the aspiring loan recipient who needs cash and is willing to pay interest on it. Detractors of peer-to-peer lending point to the regulations, professionalism, and bank policies put in place over the years in order to ensure that the investors’ investment is protected and produces a return. They may also point out that producing a detailed business plan with contingency planning, and having to explain it to a layman can be an illuminating process that makes the business better. However the cash advance holds a significant number of advantages over peer-to-peer lending. Firstly there are no fixed payment schedules, no payment due dates or late payment fees, and there is no credit check required.
Venture capital financing is a traditional financing model, which has one advantage, some similarities, and several disadvantages when compared with an unsecured business cash advance. The main advantage of venture capital funding over an unsecured business cash advance is that you never have to payback the funds. Venture capital funding is an investment. The venture capitalist takes an equity stake in the company in exchange for the funding. The downside is that with the equity stake, the venture capitalist is now an owner, is entitled to a share of the profits, a vote in how the business is operated, and share of the proceeds if the business is sold. Venture capital funding and unsecured business cash advances are similar in that there are no late payment fees and no payment due dates. However, like a traditional bank, the Venture Capitalist will require a presentation, with a business plan describing in detail what the money will be used for, and how it will create growth and profits. For example – the Venture Capitalist will want to be shown how any new liabilities will not overwhelm existing and future assets. The unsecured cash advance does not require endless meetings or exhaustive presentations.
Conclusion
The unsecured business cash advance is the fastest and most convenient way for your business to get the cash it needs to grow and prosper. The qualifications are easy; the application process is much faster than with traditional financing methods; credit worthiness is not an issue; and there is no need to hassle with justifying your ideas to a loan officer. Get the cash you need now.
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