When a business is having cash flow difficulties and cannot obtain a loan from a bank or other traditional lending source, its management team must come up with another solution. One option is to seek out a business line of credit. These are available from banks, but there are other alternative lending sources as well.
Loans can be difficult to obtain and often require lengthy paperwork. For this reason, some companies prefer to use an LOC. An LOC allows the company the flexibility to use only the monies needed, up to a maximum amount. With a loan, the company must take a lump sum all at once. Many banks will also stipulate the reason for which the cash can be used, whereas an LOC is more lenient. Generally, a company can repeatedly draw from an LOC and will pay interest on an cash that is used.
A company usually has two options with a loan or an LOC, unsecured or secured. If the company gets an unsecured loan, then no assets are held as collateral against the money that is lent. If it is secured however, then the bank or other lending institution will confiscate inventory, receivable or other assets if the company fails to make a payment on the borrowed amount.
One source of funding that you might consider is the Advance Fund Network. This lender can supply you with an LOC that you pay off using a percentage of the daily credit card receivables. The company will automatically withdraw a predetermined percentage of the daily deposits from your checking account. You can typically pay off the amount borrowed, plus interest, within three to 12 months.
The benefit to this type of lending is that it does not usually require the company to go through all of the red tape that is typically required by a bank or other lending institution. It is also advantageous that there is no set amount to be paid each month. The amount is determined by the total credit card charges for that period of time.
But, a potential borrower should also be aware of the disadvantages. This type of lending is typically much more expensive than a traditional loan, as the risk to the lender carries a higher interest rate. A borrower should make sure to check all contractual obligations with other lenders to ensure that they do not hold all receivables as collateral. This would mean that they were in breach of contract.
Borrowing money is not always easy for many companies. It can be very difficult to get out of a cash crunch for this reason. An alternative solution to a traditional loan is the business line of credit. But, the borrower should fully understand the terms prior to signing any contract.
Loans can be difficult to obtain and often require lengthy paperwork. For this reason, some companies prefer to use an LOC. An LOC allows the company the flexibility to use only the monies needed, up to a maximum amount. With a loan, the company must take a lump sum all at once. Many banks will also stipulate the reason for which the cash can be used, whereas an LOC is more lenient. Generally, a company can repeatedly draw from an LOC and will pay interest on an cash that is used.
A company usually has two options with a loan or an LOC, unsecured or secured. If the company gets an unsecured loan, then no assets are held as collateral against the money that is lent. If it is secured however, then the bank or other lending institution will confiscate inventory, receivable or other assets if the company fails to make a payment on the borrowed amount.
One source of funding that you might consider is the Advance Fund Network. This lender can supply you with an LOC that you pay off using a percentage of the daily credit card receivables. The company will automatically withdraw a predetermined percentage of the daily deposits from your checking account. You can typically pay off the amount borrowed, plus interest, within three to 12 months.
The benefit to this type of lending is that it does not usually require the company to go through all of the red tape that is typically required by a bank or other lending institution. It is also advantageous that there is no set amount to be paid each month. The amount is determined by the total credit card charges for that period of time.
But, a potential borrower should also be aware of the disadvantages. This type of lending is typically much more expensive than a traditional loan, as the risk to the lender carries a higher interest rate. A borrower should make sure to check all contractual obligations with other lenders to ensure that they do not hold all receivables as collateral. This would mean that they were in breach of contract.
Borrowing money is not always easy for many companies. It can be very difficult to get out of a cash crunch for this reason. An alternative solution to a traditional loan is the business line of credit. But, the borrower should fully understand the terms prior to signing any contract.
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