SBA Loans May Not Give Your Business Cash

A lot is being made lately of President Obama’s plan to help small business. Buried in the American Recovery and Reinvestment Act of2009 is $15 billion earmarked for the repurchase of Small Business Administration loans. The move is designed to free up new cash for lending to other small businesses, but the effect of the changes is anything but clear.

The move is an effort to jump-start the frozen secondary credit markets, but many analysts caution that it will take a lot more than a few billion dollars to get banks to make new loans. Experts caution that the small business provisions of the bailout will help a limited few businesses. Most small businesses will not be eligible for assistance, nor will many small businesses want to take on loans to get through difficult times.

More in line with what small businesses need is the new aid recently promised by the Obama administration to the automotive suppliers. Some suppliers will be able to tap into TARP cash in order to weather the storm. These suppliers will be guaranteed enough cash to make their payrolls, and industry analysts say the plan had better work. An estimated 600,000 jobs hang in the balance, and a significant drop in the number of suppliers or the availability of auto parts could spell disaster for not only the Big 3 but any automaker who builds cars today.

Cash is what small business owners need most right now but banks aren’t lending, even with increased SBA loan guarantees by the federal government. If your business needs cash, and accepts Visa or MasterCard, you may be eligible for a merchant cash advance. Unlike a regular credit card cash advance, a merchant cash advance uses the power of your future credit card transactions to deliver the cash you need for your business today. As your transactions come in, a small portion of the revenue is diverted to repay your cash advance.

A merchant cash advance is flexible, too. You can receive as much as 1.5 times your average monthly credit and debit receipts, and because repayment is based on your transaction volume, your repayment rate remains in step with your business cycles. When your transactions increase, so does your repayment rate. When transactions slow, your rate of repayment slows, too.

A merchant cash advance doesn’t depend on your good (or bad) credit, so no matter what your credit looks like, you can still benefit from a merchant cash advance. Contact Rapid Capital Funding today to see what we can do for you.

Photo Credit: Shai

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