A Credit Card Payment or A Small Business Loan?

We all know that having enough working capital is an important component for any business venture. Even established small businesses will run into cash flow problems at one point or another, understanding your financing options is just simply important.

A business cash flow can be easily disturbed for many reasons: the debt payment, the need to buy or lease new equipment or simply to meet the daily cost that all merchants go through. As there are many options that entrepreneurs can choose, it is very important that these options are properly understood. The financing option you can choose is a very important element, that can determine the ability of running a sucessful business.

Nowadays, a credit card advance is a very popular way to obtain the business funding. This kind of funding is very different when it is compared with a traditional business loans, credit card cash advances is perfect for merchants to get funds even if he doesn not have a perfect credit or can not get funds by other means.

A simple requirement that credit card advance have, is that the entrepreneur accept credit cards as a form of payment; it is particularly required that merchant processes Visa and Master Card. The payback is much easier than the loan since there are no fixed monthly payments and payments are automatically deducted from any credit card transaction as a small percentage.

On the other side, a small business loan is the most common funding option for an entrepreneur. But if compared with cash advances, getting funded is so very complicated.

There are many requirements for the debtor, such as the credit score of the debtor must be perfect, more than 750; the merchant must have important personal assets that can be used as a collateral and many factors are carefully examined before ecceptance of small business loan. In contrast, most small businesses can qualify for a fast and simple credit card advance that is completely unsecured, meaning that there are no personal assest against the risk.

Getting small business loans require a lot of documents and somewhere between 2 to 4 months until the actual funding takes place. This certainly does not apply to a credit card advance or business cah advance, as the application process is a simple 2 pages application and the funsing can take place within 7 days.

When acquire a traditional small business loan, your business will be strained with the strict fixed monthly payments, whether you sell or not. This can not happen whe it comes to credit card advances, as you make small amounts payment only if you sell products or services in credit card transactions. Failing to repay a credit card advances will not put at risk your personal credit nor it will risk any personal assets the merchants may have, but in the case of small business loans, if the debtor fails to pay the loan, it will hurt not only your personal credit ScoreĀ  but also pose a risk of losing your assets.

Always remember, you can easily tell that a credit card advance is mush easier and risk-free way to obtain the much needed funding your business needs.

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