How to End the Vicious Cycle of Small Business Loans

business loan

Does this sound familiar? You need a loan to save your business. However, you can’t get a loan because your business is struggling.

Trust us when we say you’re not the only one stuck in this cycle. Over 80% of small businesses have to close their doors forever because of cash flow shortfalls. But sadly, the big banks deny roughly 75% of small business loan applicants.

However, if a major bank says “No,” that doesn’t mean there is no hope. Here are some of your options to get access to cash or funding.

A Merchant Cash Advance

Here’s the good news: This is not a loan. It’s not subject to the same type of regulations that typical lenders and big banks are bound by. This is why you should check out Payvant Capital to explore your options if you’ve been denied a small business loan.

A merchant cash advance (MCA) can give you an influx of funding in exchange for a certain percentage of your future transactions. These are extremely popular among small business owners for three main reasons.

The first reason is the high approval rates. You can qualify if you have been in business for 6 months and have monthly transactions over $10,000.

The second reason is that the MCA’s turnaround time is incredibly fast. You can submit your application and get approved within 24 hours, which makes it ideal for emergency situations.

And the third reason is the reasonable payback terms. Your payments are linked to your income, so if your sales are slow for a month, you will be making smaller payments. This is better than having to worry about making the same static (and often large) loan payment every month.

A Business Line of Credit

A line of credit through a bank can be just as difficult to get as a loan. However, you might be able to get a business line of credit through a smaller bank.

This could be attractive because your payments and fees are based on how much of your line of credit you actually use. If you have a line of credit up to $10,000, you’re under no obligation to use it all.

The downside is that you’re often not free to spend your money however you see fit. You may have to submit paperwork to the lender explaining why you need access to your line of credit, every single time you need money.

A Business Credit Card

This is another form of revolving credit, and your odds of approval are higher than the bank. You can also get perks like cashback and reward miles when you use it.

However, the credit limits are often relatively low. So, if you need a major influx of cash or a means of funding something major, this may only get you part of the way there.

You can break the cycle! All 3 of these options are perfectly viable and help business owners like you every single day. Just because the banks aren’t an option doesn’t mean you’re out of options.

Don’t give up! Find the best option to help your business and your future!

Important Things to Consider When Looking for Debt Relief

Being in debt is stressful – for many, it is a reality that weighs heavily on their shoulders, keeping them up at night. Some people even flinch at the sound of their phone ringing, fearing that a debt collector will be on the other end. 

So what is a person to do? Seek financial help, of course, but before you go about it, make sure that you do your research first. There are a few different options for debt relief and you want to make sure that you are choosing the right one that works for you.

Debt Consolidation Loan

debt relief

A debt consolidation loan is a popular option when it comes to finding help out of a bad financial situation. It is considered a money management tool that lets you combine or consolidate your unsecured debt (like credit card debt, personal loans, phone, and hydro bills, etc.) into a single loan from a single lender. The lender will pay off all of your unsecured debts while gathering the combined sum into a single loan with a set interest rate, which you are responsible for paying back.

While it sounds good on paper, make sure you do your research before committing to a potentially bad credit consolidation loan that leaves you with even higher interest rates. That’s right – while the aim is to achieve lower interest, this isn’t always an option with some lenders, especially if you are considered a high-risk borrower. High-risk borrowers can expect interest rates of 14 percent to over 30 percent from second-tier lenders, which can do more harm than good to your financial situation.

The other problem with these types of loans is that they can be difficult to obtain unless you have an acceptable credit rating or collateral like property or other assets. This is unfortunate because people who truly need the help are the ones who are going to be denied assistance.

Debt Consolidation Program

Consider an alternative approach with a debt consolidation program provided by a non-profit organization dedicated to providing financial management services to those who need it most. While identical to a consolidation loan, the biggest difference here is that there is no loan involved and anyone can qualify to enter the program and receive the help of a certified Credit Counsellor. Not only will they consolidate your debt, lower your monthly payment, and lower (or completely stop) the interest, but they will also stop calls from collectors and guide you through the entire repayment process.

What’s more is that a Credit Counsellor will also give you the financial management skills you need to ensure you don’t fall right back into financial trouble after you’ve completed your repayment program – less than 1% of clients will ever need to do a second program. This extra bit of care just goes to show that they are truly interested in helping and not just a lender looking to collect interest off you.

So if you’re seeking debt relief, make sure to find the right kind – choosing to participate in a program vs. a standard loan can really make a huge difference in your journey towards financial wellness.