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Small and medium-sized businesses have historically had challenging relationships with traditional lenders. When these business owners are in need of more cash flow, they are the least likely to be approved.
If you’re a new business owner you’re going to find it difficult to obtain a traditional loan from a bank. In most cases, any of the following could prevent you from getting a loan:
The good news is that technology in the financial sector is revolutionizing the way lending is done and big banks are no longer the only option for SMB loans. Alternative financing in the U.S has tripled in size from 2014 ($11 billion) to 2016 ($34 billion)*:
Once a line of credit is established, interest is typically calculated based on the average daily outstanding balance. Startups and new businesses can use a line of credit as a way to improve a credit score.
Which is a more traditional approach to lending. One example of B2B lending services is Fundera, an online broker which matches lenders and borrowers. Typical minimum requirements for a term loan are 1+ years in business, 600+ credit score and $90,000+ in annual revenue.
Giving up part of your business for a cash infusion can be worth it, but only with a clear view forward. With EBC, shares are valued according to the total share count and the estimated valuation of the business.
Borrow amounts equal to up to 95% of the value of outstanding invoices. Invoices serve as collateral.
This post was reviewed by our team of accounting and financial experts. TGG’s mission is to make business owners’ lives better through excellent financial management. We strive to provide the most up-to-date and objective information on accounting-related topics so our readers can make informed decisions based on factual content. All posts undergo a review process with at least one member of our Leadership Team to ensure accuracy.
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