If you can’t get a bank loan, you might consider getting a Small Business Association (SBA) loan. However, the approval rates are not much better, and they can be just as intrusive and time-consuming.
You could easily spend days or even weeks preparing your application, only to be denied and left right back right where you started.
But don’t panic, you do have options to get an influx of cash or funding if your business has been denied an SBA Loan.
Here are a few of the most popular.
A Merchant Cash Advance
A merchant cash advance (MCA) isn’t a loan, so your chances of getting approved are considerably higher. You can receive as much as $500,000 in funding from a company like Payvant Capital if you have been in business for 6 months and you can show you have at least $10,000 a month in transactions.
Basically, you’re agreeing to get an upfront sum of money and pay it back (plus fees) via a percentage of your business’ transactions. One of the key benefits to this is your payments are tied to your income. So, if sales are down for a month, your MCA payments will reflect that number. This is opposed to a loan, where you would start making fixed monthly payments right away, regardless of your income.
You can also apply online and get approved in 24 hours, which makes this a popular choice for companies that need emergency funding.
A Business Line of Credit
You may also consider looking into a business line of credit, which would give you access to revolving credit up to a certain amount, say $30,000.
These are attractive to business owners because they don’t have to use their entire credit limit, and their fees are tied to how much they actually use. If they only use $3,000 of that $30,000 limit, their fees will be based on that amount. This gives you more flexibility than a loan, where you would have to make regular payments on the entire amount.
The downside to the line of credit is that it has a lower ceiling than a loan. It can be very difficult to get a line of credit for more than $100,000.
Another drawback is you’re not free to spend your funds how you see fit. You may be required to fill out paperwork each time you need to use your line of credit, or you might even be subject to yearly reviews to keep it.
A Business Credit Card
This is appealing for the same reasons we just listed above. A business credit card gives you revolving credit up to your credit limit, which means you’re only paying back what you use and your fees are based on what you use.
Plus, a business credit card may offer you incentives such as cash back, reward miles, or travel perks.
However, the downside is the same as the line of credit. You have a low ceiling for your credit limit. This means it’s not the best way to purchase large equipment or make significant repairs to your building.
Another downside is that these cards are often secured by collateral of some sort. Defaulting on your payments could cost you a major asset and damage your personal credit.
No two businesses are the same, which means no single funding option is perfect for everyone. However, if you’ve been denied a loan, a MCA, a line of credit or a business credit might unlock the funding you need.
Never take a “No” as a sign there’s no hope.