For many business owners in today’s economy, it is becoming increasingly difficult to get a loan for business. The normal channel of the local business bank has been all but shut down due to tightened underwriting conditions and difficult approval standards. Additionally, many businesses and business owners have suffered through negative credit ratings due to the economic situation.

For these business owners, there are few options outside of borrowing from friends and family, taking out an equity loan on their house, or accepting the offer of a merchant cash advance from their credit card payment processing company.

These unregulated “advances” are not true business loans. Legally they are considered “cash advances” which means that the cash advance provider can charge any interest rate they desire. They can also change these rates at any time during the repayment period on the loans. It is not uncommon for cash advances to businesses to have effective interest rates above 50%.

Additionally, many merchant cash advance providers will charge hefty upfront fees as a condition of receiving the money. They also will require merchants to switch payment processing providers or purchase new swipe equipment as an additional requirement. While often advertised as “unsecured” and “not based on credit”, it is important to realized that merchant cash advances are not secured on the business owners credit, but they do often file a UCC (uniform commercial code) lien against the business.

This means that if the business is ever sold, the cash advance company has a legal claim to the proceeds of the business before the owner receives their money.

However, there is now a better way for a business to get working capital quickly, even if their business credit is less than perfect. This new type of business loan is called credit card receivable financing or CCRF and is characterized by:

Interest/Factor rates that are 50-80% LOWER than a merchant cash advance on averageNo need to switch credit card processors – stay with existing processorNo need to buy any additional equipmentNo upfront feesOwner credit down to a 550 scoreMaximum loan to $500,000A regulated business loan that builds true business credit is subject to state laws regarding maximum interest rate.Approvals in 48 hours: Fundings in 7 days.

In today’s difficult business environment it is time that businesses finally have a cost effective way get a loan for business. To find out more about this new, lower cost business loan click below.