Pros of Revenue Based Loans
Of utmost importance to many business owners is the smooth and successful running of a business. Businesses can’t totally eliminate the need for loans. You could be looking to join a new venture or expand operations. You could lack the funds necessary for this. You will appreciate a business loan in such a situation. These loans from conventional financial institutions are not always available to small businesses. For small businesses, revenue based financing is a great option. Unlike with conventional loans, revenue based financing is available to small businesses that may not have the collateral needed to get a conventional loan. Even with a poor credit score, a small business can obtain finances to fund their operations. Revenue based financing has become very beneficial to small businesses. Its many benefits are the reason behinds its increasing popularity. Here are some of the benefits of revenue based financing.
With this form of financing, the application process is simple. Loan approvals are harder to come by due to the recent financial crisis. Traditional loan application process it time intensive as there are numerous forms that must be filled. Traditional loans involve a lot of paperwork. There is significantly less paperwork to be filled with revenue based financing. The application process is simple since the only other thing required other than the application form is the business’ bank and merchant account statements. For traditional loans, numerous documents are usually required. The length of time required for approval is also short and often takes no more than a week. When in need of emergency funding to carry out operations, revenue based financing is ideal.
A good credit score is required with traditional loans. Getting a loan approved with a bad credit score is almost impossible. This is not the case with revenue based financing. Your current state is what is examined by revenue based financing institutions. The sales the business makes determine the amount that is made available to you from these lending institutions. This type of financing doesn’t require security as mentioned earlier. Small businesses tend to lack loan collateral. Revenue based financing proves to be a great alternative.
With revenue based financing, the mode of payment is more flexible. This is very beneficial for businesses. You can’t always predict the income of a business. In case a business has slumped in sales, they don’t have to strain resources to meet the monthly payments as they are not fixed. A business can be able to pay back their loan within a short period of time because the time required to pay back the loan is fixed. To learn more on this, visit Dealstruck.