Alternative Financing Grows With Bank’s Credit Crunch

Alternative financing, such as merchant cash advances, are growing in popularity with businesses due to their accessibility and speed to funding. As the FDIC reports at second highest number of “problem banks” since 1995’s high of 195 banks.

For most of the 171 troubled banks (2% of FDIC-regulated banks), the problems started, not from lending to the commercial sector, but from the high level of questionable subprime home loans. However, businesses and the entire nation’s economy feel the repercussions of the banking crisis.”We’ve had profound problems in our financial markets that are taking a rising toll on the real economy,” said Sheila Bair, FDIC chairman.

Merchants who formerly could depend on a line of credit from their bank or access to business loans have felt the squeeze of tougher loan criteria and lowered levels of available lines of credit. Other businesses have felt the entire disappearance of their line of credit.

With a merchant cash advance, alternative business financing companies, such as US Business Finance Corp, help businesses improve their operating capital picture by tapping future MasterCard and Visa credit card purchases. By “preselling” their sales, merchants access most of the cash of the future sales with the cash advance funding. As the future sales manifest, a small percentage of the sale goes to repay the merchant cash advance.

As banks regroup and attempt to assess what their risk on their current loan portfolio, alternative lenders continue to take on the risk of the business cash advance and not burden businesses with the need to pledge assets against the business cash advance. In times of tight and sometimes sporadic cash flow, business owners do not need to worry about being late on the cash advance repayment or any late fees.

US Business Finance Corp experts have treated their phones as business hotlines lately answering questions and helping applicants as more businesses find the relief business cash advances afford.

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Filed under: Alternative Capital, Business Cash Advance, MasterCard/VISA