A personal loan is a loan for an individual and a business loan is a loan for a business. In business loans there are specific loans for small businesses. In the USA a large portion of these loans are managed by SBA or Small Business Administration. As an entrepreneur you can get instant cash injection by opting for a small business loan. But there is another type of loan that you can opt for as an entrepreneur. It is known as cash advance business loan. The important decision for you to make is which of these loan options you should consider.
In many ways a small business loan and a cash advance business loan are similar. Both are unsecured loans that are offered to businesses. This means that one doesn't need to provide any collateral for getting these loans. All the banks and financial institutions offer business loans but there are specific lenders that offer cash advance.
As an entrepreneur it is important for you to decide whether to opt for a small business loan or a cash advance business loan. In terms of cost the former is definitely less expensive than the latter. A cash advance doesn't fall in the category of loans because it is supposed to be a cash advance against future sales. This means there are non regulations on the rate of interest. Some of the lenders charge up to 50% APR and any business loan is less expensive than this rate of interest.
The other important difference between a business loan and a cash advance is that the former is given against credit and non-credit sales figures while the latter is only given against credit sales figures. The former has a fixed tenure so the repayment terms can be exactly calculated. In the case of a cash advance a percentage of the daily sales volume is paid to the lender and this arrangement continues till the loan plus interest is not paid off.
Time is of essence when you apply for a small business loan or a cash advance business loan. Since lenders typically consider credit history when underwriting a business loan application the process could be slightly longer. In cash advances credit history is not strongly considered and hence it can be disbursed faster. However, there are lenders that can disburse loans in 2 working days flat, irrespective of whether you apply for a business loan or a cash advance.
For an entrepreneur it’s extremely important that they are able to fuel cash into their business wherever there is an urgent requirement. If proper cash injection is not possible many business strategies and growth plans come to a standstill. This is something no entrepreneur can withstand. Banks have the best rates of interest but they take their time and time is the biggest worry for an entrepreneur looking for an urgent loan. To save money you should apply for a small business loan but if you want more flexibility in payment a cash advance business loan is a better choice.
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