How many different funding sources should I apply for?
The world we live in offers many opportunities for entrepreneurs. There will always be resources to help you, no matter what your business is about. However, it’s no secret that funding sources are a scarce commodity for most entrepreneurs.
There are so many funding sources out there, that many businesses don’t know where to start. But when you are a startup that in need of fast cash it can be tempting to apply to for as many funding sources as possible. But that may not be the best option for your business.
Whether or not you plan to apply for multiple funding sources, knowing their pros and cons is crucial.
Bank Loans
Pros
- Have low-interest rates that can be set at a fixed monthly rate.
- Can help build up your business credit
- available funds for a large number of business purposes.
- Provides financial guidance from a Business Banker.
Cons
- Typically requires a hold on collateral.
- Requires a high business and personal credit score.
- There will be a lot of paperwork up front.
- Low approval ratings.
- A long wait time to hear the status of your approval.
Venture Capital
Pros
- You can secure large amounts of cash for your immediate business needs.
- There is often no repayment schedule.
- Venture capitalists assume the risk of your business’s stability, despite your liability.
Cons
- You will often be giving up a portion of your company when it comes to this funding source. This is true in profit sharing or relinquished control rights.
Merchant Cash Advance
Pros
- There are fewer requirements than a traditional bank loan is going to ask for.
- At eBusiness Funding, we actually only have two requirements of our customers. The first is that you have been operating as a business for at least six months. The second is that you are doing $10,000 a month in sales revenue.
- Approval rates are higher in MCA’s than they are with Venture Capitalists or Bank loans.
- Bank loans traditionally only accept 20% of those who apply. At eBusiness Funding, we accept 90% of those customers who meet our minimum requirements.
- MCA’s give you complete control of the funds. Merchants are free to use funds for what ever they feel their business needs.
- At eBusiness, we don’t claim to be the expert in your industry. We allow you to use the funding the way you need to in order to grow your business’ future.
- No fixed monthly payments.
- No credit score required.
- You can receive the cash you need in as little as three days!
Cons
- Potential to get stuck in the trap of continued reliance on merchant cash advances.
- Expense planning will be key while repaying your advancement because of daily payment requirements.
- eBusiness Funding believes in the future of your business and offers MCA’s without collateral. Our requirement for unsecured funding deals are daily payment withdraws. However, this shouldn’t concern you. We base the daily payments on a fixed percentage of your daily credit card sales. This means tailored payments to the health of your business. Payments that fluctuate with your daily sales until the full advance is paid off.
Alternate Options
Another option, but one that we wouldn’t recommend, is stacking. Stacking is the act of securing funding from multiple, individual sources at once. Though the funded amount may be greater, your payback amount will be much higher. Even still, choosing to stack your funding sources is sometimes a necessary decision. Below, we’ll explain the pros and cons of this type of funding. Firstly, Familiarizing yourself with your funding provider’s policies is crucial. Second, it’s important to note that a bank may deny you for a loan if you have too many credit issues in the last six months. They also may deny you if you have too much outstanding debt. However, negative loan debt is a small detail to venture capitalists during business expansion.
Next Steps
It all depends on your situation and only you can be the judge of that. If you’re in need of fast funds for a project, consider a merchant cash advance with eBusiness Funding. Contact eBusiness Funding now or complete the contact form on this page now.