Unhealthy Signs: Why You Can't Get a Business Loan

Unhealthy Signs: Why You Can't Get a Business Loan

In the past, getting a business loan required filling tedious paperwork, as well as spending sleepless nights thinking of the loan's approval. Due to the long wait and the many documents needed, some business owners resorted to getting loans from loan sharks or closing their business altogether because of insufficient capital. Today, an alternative to traditional loan is now available and it looks just as promising.

A merchant cash advance or a small business loan is a lump sum payment given to a business in exchange for a monthly portion of credit card sales. For example, you and the cash advance company agrees to a 10% monthly payment of credit card sales, it means that for every $1,000 credit card sales the company would get $100 as payment. This scenario is highly ideal to many because they have high credit card sales that can meet the payment demands or the loan.

If you're thinking of getting loans, you should first think about your decision, since it could make or break your business. It is advisable that you reflect on your business practice before deciding on anything. Here are some signs that you shouldn't go for small business loans.

You mix business expenses with personal ones. If you are a business owner who does not assign a fixed income for yourself, maybe you shouldn't be getting small business loans or any loan for that matter. You will make your finances a living nightmare if you do not choose to mend your ways so consider improving it first before you incur serious debts.

You tend to remain in the red for a long time. Admittedly, many people tend to overlook debts in favor of getting another debt so you must be careful. Review your business and personal history and see how long you were in debt before being able to pay all these. Small business loans require payments even if the terms offered for such a loan is flexible. Don't plunge head on into another loan unless you truly need one.

You keep sloppy or incomplete business records. Merchant advance companies may require lesser paperwork but it may not grant your request for small business loans if these are not in order. Always remember that poorly kept records reflect an inefficient manager.

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