As a small business owner in the UK, one of the most frustrating things you will face is when you hit a ceiling on your growth journey, and to raise the ceiling, you need to raise funds. There are not many avenues for a small business to raise funding. Whether you need to have a more robust supply chain, get more equipment, hire more staff or invest in inventory, secure and reliable funding options can make a huge difference in your business’s future.
There is a range of funding options that offer easy and accessible ways to raise capital that we will discuss in this blog.
Why Banks Often Decline Small Business Loan Applications
As a small business owner, when faced with the need to raise money, the first idea that comes to mind is to get a loan from a bank. But when you try to execute this idea, you get to know how difficult it is to raise money (or get a loan) from a traditional financial institution like a bank. For starters, the loan approval process is complicated. Requiring all sorts of documentation like the business’s financial and account statements, growth plans, repeated meetings, and whatnot. The loan approval rate is very low. Many of the banks require you to submit collateral as well.
These strict requirements, lengthy procedures, low approval rates, and requiring collateral make raising money one of the most difficult tasks for small business owners. In today’s age, with the availability of fast funding options, getting a traditional loan from a bank is not a viable option at all.
Exploring Alternative Business Funding Option: MCA
Let’s explore some alternative funding options that are available to small and medium businesses. These financing options have been quite popular since the last decade in the UK and many small and medium-sized business owners rely on these funding options to fuel the growth of their businesses.
Merchant Cash Advances
Merchant cash advance is one of the most popular methods for small and medium businesses to raise capital. It provides a business with a Cash Advance against its future card sales. There is no collateral involved in this funding option. Limited or no documentation, like bank statements, is required and an easy-to-follow process. All a business needs is to have a history of doing business through card sales. The financial institution that gives a merchant cash advance loan will look at the record of your card sales and loan you an advance based on that.
In MCA, you do not have to have a fixed payment schedule. The repayment amount will be deducted from your card sales. If you have higher card sales, you will repay a bit higher. If during months where you do not have that much card-based sales volume, you do not have to worry about paying huge sums back.
MCA is a fast funding option, with some companies offering a same-day merchant cash advance.
In conclusion, as a small to medium-sized business owner, you do not need to go to traditional banks to raise money. You can choose a secure and fast funding option like a Merchant Cash Advance to fulfil the capital needs for your business.
