The last two years have become a long way for entrepreneurs who seek financing for small businesses. Many companies have seen their bank channels canceled or withdrawn in dealing with the tightening of bank guarantee and reluctance of banks to be loaned despite the amount of cash provided by the government.
The first best choice for any business is SBA 7A loan. This is the most versatile loan that SBA currently guarantees and is designed to meet various business needs. The new bill delivered by the Congress is designed to assist the amount of this loan available by increasing government guarantees against default to 90% of the funded amount for various types of businesses. Malang reality for many businesses is that many banks and non-bank lenders do not lend or approve loans, even with increasing government support. Because the SBA actually does not make any loan, but only guarantees them against the default, the last loan authority rests with the bank. The government cannot force them to make loans.
Businesses that need to refill their working capital or need to get a small business loan mostly abandoned by traditional big banks. As trust in the small business sector has been reduced, some lenders have the knowledge to bear and effectively manage the default risk in an uncertain environment today. In some cases, the credit union has stepped up to fill the emptiness with a more member-centered approach to businesses in their members’ base. Usually, the tariffs and conditions of this loan are very competitive compared to most sources of capital.
Other options for business are trade advances marketed by different payment processors and advance payment companies. This option has flexibility to be able to handle various credit situations. This type of capital is not a true business loan, but rather, ‘forward’ in future credit card receivables purchased with discounts for the actual value. Examples are companies “advance” $ 75,000 and reclaim the $ 100,000 credit card revenue. As you can see, the effective interest rate is 25%. Because advance loans are not regulated as a true loan, there is usually no legal limit to the top of the interest that they can collect, unlike traditional business loans. In many cases, trader cash companies will charge 50% high interest rates and require companies to replace their credit card processors.
Fortunately, there are new and flexible-effective options available for businesses that use credit cards, or operate based on cash, or a combination of both. Although there is no one size that is suitable for all the perfect loan options for each scenario, the business must take the time to consult with an expert before moving. Each type of financial business company is a eternal decision that can have permanent consequences, and must be taken very carefully, even if the situation is urgent.