Every small and medium enterprise needs financing to move forward. There was a time traditional banks were the go-to option for all of them in need of business financing. But with evolving times, the way SMEs get their funding has changed too. They no longer depend upon the restrictive, arduous, and long-drawn bank processes to avail financing for their growth. Out of the many reasons behind this drastic shift in preferences, the most significant detriments are conditions like heavy collateral's and high credit scores put forth by traditional banks. Now add to this list hassles like heavy documentation, unnecessary legalities, and a long wait. No wonders SMEs have had a 180 degree flip in their preference as they flock to alternative lenders, like Cresthill Capital and Mantis Funding, where the loan approval process is a breeze. No heavy collaterals, no minimum FICO score demands, and the loan disbursal process is super fast. Who wouldn't like that? In view of this drastic shift, let us take a close look at the three important offers in the alternative lending landscape. Invoice Factoring or Accounts Payable Financing A savior when clients don't clear invoices on time, and you are left stranded with pending payments. Suppose you have a big check coming in next Monday and are depending upon the money to purchase new inventory. The client cites some reason for an unexpected delay, but you have already placed an order. Oops! This is where invoice factoring or accounts payable funding step in. Invoice factoring or accounts payable funding is offered by alternative lenders, like Crest Hill Capital and Mantis Funding, wherein the amount of the outstanding invoices is paid to the borrower with an understanding that they would repay it upon receiving their pending payments from the client. As many Cresthill Capital reviews suggest, businesses struggling with tight cash flows due to payment delays have found these offers godsent. Merchant Cash Advance Merchant cash advances are like taking an advance on your future income/revenue. Here the applicant business gets a desired amount of cash immediately in lieu of a portion of their future sales. Instead of a fixed payment, you're offering a small percentage of your daily revenues. Micro-funding with a merchant cash advance, the applying businesses' daily transactions (usually the ones through debit or credit cards) are used as a base to come up with a shareable profit percentage. Merchant cash advances can be both short and long term as per the conditions decided between the lender and the client. Micro-funding Small proprietors, small businesses with very few employees, home-operated companies, and online businesses usually opt for micro-funding when they need a very small amount of money, like $10,000 or less. Such businesses find it almost impossible to get through the traditional bank's credit process and are often rejected. With micro-funding, small startups and businesses can avail quick cash that they can repay in equal installments, just like a traditional credit deal. The documentation is less, and the underwriting process is more flexible. Which of the above microcosm of alternative lending landscape appeals to you the best? Micro-funding, invoice factoring, or merchant cash advance? Let us know in the comments below.
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