Business Expansion Loan

When seeking a non-bank funder, you must work with an institution you can have an association with for a long time. Having various financing options can aid you in managing different periods of your enterprise’s lifecycle, i.e., from the initial days, with cash flow as your main concern, to its expansion stage.

Building an effective relationship with an institution that lends capital, hinges on your capability of repaying punctually, reducing the borrowed capital’s cost, and maximizing its impact. Credit lines, cash advance, and small business-purpose loan support various functions in the growing phase of your enterprise. Now, which of these are the ideal option for your small business? When do you have to rely on these? Here, we will help you to know the answers.

Merchant Cash Advance

An MCA involves selling a part of your business credit card receipts to a lending institution in return for a big, one-time payment. In this financial arrangement, the lending institution will seize their piece of the pie up to the full remittance of the loan. Utilizing an MCA is typically about having the capital that you require fast at a greater rate than usual.

This is usually among the costliest products in the alternative lending space, but businesses should start with some lending measure. You may think twice about taking a chance after considering the possibility of the failure involved in it. Anyhow, taking that risk can aid in building a positive association with a lending institution and getting to the right path.

For instance, have you reached the maximum of your operational capability? Consequently, have you been failing to satisfy purchase orders or turning turn down these? If yes, it would make sense to use an MCA, for not just better operational capability but also more business revenue than usual. The advantage of an MCA should be greater than its cost, so examine the facts and figures beforehand to make the right choice.

A different great application for an MCA is to accumulate your working capital in busy seasons, for financial support in case you face a slower business season/dip. You do not want to borrow money when your business is in a position where it desperately needs funds. Borrowing it then will damage your operational capability, plus it will make it more likely to be short on a flow of cash when repaying the loan.

Business Credit Line

Many people ask us when would utilizing a credit line be more beneficial to their business than a short-term/long-term loan. Do you bank on invoicing clients? Do you require the capital for building your accounts, making staff salary payments, or keeping inventory ample for your purchase orders? If yes, it might be more sensible to have a revolving credit line until it is possible to accumulate enough value in your business accounts for that inventory to be balanced.

When taking the effort to grow a business, you tend to chase invoices, albeit it is an established enterprise. In this case, operating with a credit line allows maximizing your business’s capability of growing, giving your customers time to settle what they owe to you, and continuing to serve your sector.

Working Capital Loan

Small Business

Taking a loan with a short repayment period is perhaps costlier than a conventional bank loan. Anyhow, given the flexibility, speed, and smaller financing sizes that non-bank lending institutions offer, working capital (WC) loans tend to appear more tempting. The short payback period for the loan, usually under a year, helps to cause borrowing to be more strategic. You may feel that it is better to have the least loan payment, but repaying a conventional loan over a long time means settling debt after the need for the funds.

A loan with the best rate and terms may be the optimal option if you can pay it back. We would suggest taking a loan with a repayment period of 6 months versus 2 years, to make the best use of the funds at the smallest possible cost.

Loan For Business Expansion

What would happen if your enterprise is no longer a startup, and you are taking the next main step in its growth? Expanding that business space, hiring new staff for it, and having updated tools can be costlier than what you can cover with a 6-month loan. You may contemplate requesting to a bank for a small business financing product, but it has strict requirements and a longer-than-usual time for approval.

A business expansion loan is a perfect option that falls between the two financial products mentioned above. It has lower interest rates, longer terms, and larger loan sizes as compared to a WC loan while providing the same flexibility and speed of other lending options.

When seeking funds for your enterprise’s expansion, it tends to be difficult to discover the optimal situation for you. At this point, you cannot afford to have a loan with a 10+ year repayment period reducing your top year returns. Collaborating with a non-bank funder for a greater targeted approach enables reaching the optimal spot for you and that lending institution between the payback period and the amount of financing.

Coordinating The Different Options

You should aim to discover a lending partner that aids your business in growing. Some conventional loan products come with low rates, but these will have a longer repayment period than usual. The time to process the loan and the customer experience that you have with an alternative lender for your requirements are factors in borrowing capital. Given these and all the other factors, a non-bank financing option can contribute to great business success.

Discovering a non-bank lender that continuously works to better support your funding requirements and industry, allows getting the best rate for your business capital. The lender works to understand their loan seekers and their sectors, so the institution can help to obtain the right option for your enterprise whenever you require it.