subject: Small Business Loans: Providing Capital To Small-scale Businessmen [print this page] Small-scale business enterprises play a vital role in the growth of the US economy. They generate jobs, increase production of consumer commodities, and improve employee skills. The government supports small business enterprises. In fact, the government has created an organization for small-scale businessmen. This helps business owners cope with financial setbacks and management problems. There are over a million small-scale business establishments in the country.
Small businesses are differentiated based on the number of employees and annual income. Companies with less than 500 employees are considered small businesses. Their annual gross income varies, albeit they significantly contribute to the countrys GDP. One major problem of small-scale businesses is capitalization and budget allocation. Some entrepreneurs cannot start a small business because of capital deficiency. Likewise, there are small businesses that go bankrupt.
Small businesses utilize various credit schemes to sustain business operation. One of these is the small business loan. There are two categories of small business loan: collateral loans and business cash advances. Collateral loans are given by banks and credit agencies. In collateral loans, creditors require collateral payment from debtors. Collateral refers to secured property that can serve as payment should debtors fail to pay the debt. Common property collaterals are house, car, insurance account, and business title.
On the other hand, cash advances do not require collateral. Lending companies charge higher interest rate for cash advance small business loans. Most small-scale businessmen prefer cash advance over other business loans. Cash advance credit is a fast, easy, and convenient lending scheme. Loan approval only takes around two to seven days. In the same way, you do not need to accomplish long application forms. Lending companies do not check a debtors credit history. Hence, one can advance business operation despite poor credit history.
Moreover, cash advance small business loans do not have a payment due date. Lending companies allow subsequent payments until debtors fully pay their loan. Cash advance loans do not have a fixed payment amount. Rather, debtors allot a certain percentage from their total sales. Payment depends on the growth, performance, and revenue of a company.
Lending companies provide both starting and working capital. Starting capital helps businessmen start a new business, while working capital relieves current financial setbacks of a company. Small business loans enable businesspeople to sustain business functions.
