In the midst of a credit crisis, tightening bank lending standards, and an economic downturn, alternative methods of business financing is one of the hottest topics among business websites and business magazines.
In its small business section, CNNMoney.com recently featured an article titled, "8 Places to Get Financing." Business Week has featured articles titled "Collecting Money in a Bad Economy," "Risky Financing for Cash Strapped Startups," and "Credit Cards Replace Small Business Loans," and all over the internet. owners whose businesses are being affected by the economic happenings of today.
But even some of these alternative methods of business financing are becoming harder to get. In an article titled "Angel Investors Get Picky," Business Week's Amy Barrett writes, "Competition for startup cash is tougher than ever, and companies that might have bought venture capital in the past are turning to angels." But according to the article, even though the number of angel investors has increased, the amount lent has only increased very slowly and is expected to "hold steady" this year.
With that said, there is obviously a need for more available business financing, and to the advantage of merchants, there is another option; merchant loans, a way for merchant business owners to use their business credit card sales to get funds for their businesses.
Lenders who provide merchant loans do so based on the borrower's credit card sales. In order to receive a merchant loan, a merchant's business must process at least $ 2,500 in monthly credit card sales. If the applicant meets this requirement, lenders will review the last four months of the business's credit card statements, and determine how much money that business qualifies to receive. The borrower can then receive that money in as little as ten business days.
You may already be sold by the ease in which merchant loans can be accepted, but it is the repayment process that makes merchant loans so suitable for owners of retail and service-oriented businesses. A merchant loan is repaid via a business's credit card sales. Meaning, every time a customer makes a purchase using a debit or credit card, a small percentage from that sale goes towards the repayment of the merchant loan. These repayments go with the flow of the business, making it easier on business owners who do not have to worry about a loan payment being too high for a particular month.
In a time when even the "alternative" sources of business financing are becoming harder to land, merchants have the upper-hand. Merchant loans are available for use with few requirements, and a simple repayment process that makes them ideal for merchant business owners.