If you have ever wanted to start your own business and try your hand at entrepreneurship then you may want to look into small business loans. If you have already started your business but need more money to get things moving you can look into getting cash advances. Most people who start up their own businesses do not have the money to get them started completely. Or those who were able to start up their business are sometimes not able to keep up with expenses. In these cases you need to either save up money until you can start your business or you can start now and get a business loan or cash advance. So which one should you get? What are the differences between small business loans and cash advances?
There are differences between small business loans and cash advances; one such difference is that one of them is a loan and the other is not. Here are descriptions of both business loans and cash advances, along with the ups and downs of each one:
- Small business loans. When a person decides to start their own business and they need some money they can apply for a small business loan. The small business loan will not be granted based on the status of your business. A small business loan will be granted based on your personal finances and the status of those finances. Banks deny somewhere close to 90% of business loan applications because of things like bad credit or insufficient time as a business owner. Basically business loans require security, good credit, and a long business history.
- Cash advances. A cash advance is something that is provided by many credit card issuers. Cash advances are for those who have already started their business. Cash advances are quicker than business loans because they don’t have as many formalities and requirements. In order to get a business cash advance your business must be registered and established and you need to have proof of monthly revenue. Cash advances do not have fixed payments, a percentage of the credit card sales you make with go to the lender. It is much easier to get a cash advance approved than getting a small business loan approved.
Cash advances are becoming more and more popular however; a cash advance can’t help you with a start-up company. Business loans have more restrictions and are harder to obtain but they can help with start-up companies as long as you have good credit and your other finances are in order.
Madison Hewerdine is an author who specializes in small business loans and has a passion for dancing.