If you are a merchant, you can ask for and obtain a merchant cash advance. The money so obtained can be used for a variety of purposes as long as you can show that you have sufficient collections each day to meet the repayment schedule. The only areas where the lender will need convincing are your ability to repay and your willingness to do so. If your credit rating is good and your business model is such that there is a regular flow of customers, you should have no trouble in getting this advance.
Those looking for small business financing should also approach the Small Business Administration for help. If the SBA is convinced of your business plan and agrees to underwrite your loan amount, the risk to the lender is reduced. The lender is, therefore, more willing to consider your loan application positively. You might also be able to negotiate a lower rate of interest because of the lower risk to the lender. This will increase the profitability of your operations as well.
To ensure that you get your small business credit, make sure that the banker is aware that you have invested not just your time, but also your money in the venture. Credit unions and other lenders typically expect you to have invested between 25 and 50 per cent of the necessary capital.
You should approach small business lending institutions when you need small business loans. Such institutions have the mechanism to evaluate your small business or start up and have funds earmarked for this purpose. They are also more willing to lend at a lower rate of interest.
Use all the collateral your business has built up to obtain a business credit line. By pledging the assets of the business, whether it is real estate or machinery, you are reducing the risk to the lender. This kind of financing is much easier to obtain then a loan based just on the cash flow of a company. Of course cash flow is still important, but collateral helps to ease the process of obtaining the loan.
When applying for small business loans step into the shoes of the lender and vet your proposal thoroughly. You will find that you need to convince the lender of your ability to repay the loan from the cash flows generated by your business. Lenders are also concerned about your willingness to repay the loan. Here, your credit rating and credit history come into play. If you have a good credit rating, make sure that you highlight this to the potential lender.