Provisions for small business loans in the American Recovery and Reinvestment Act (Recovery Act) have just started to trickle cash into the hands of capital-strapped Small Business Administration (SBA) applicants. There are over 360 SBA lenders that have not approved a single loan under the government sponsored program since October, 2008; nearly half of those lenders had not approved an SBA loan for over two years. As a result of the Recovery Act, there are now about 1,200 lenders participating, which is a good sign. However, there is a critical program intended to help small businesses that are struggling, which has yet to get off the ground as of this writing. The America’s Recovery Capital program is geared to businesses that only need amounts up to $36,000 — a modest capital need that might not seem worth bothering with for most business lenders.
If you have a small business that just needs $20,000 to $50,000, and you are having trouble finding lenders or investors, you do not have to wait around for your turn to get a piece of the Recovery Act pie. There is already an option that you can tap into without waiting on bureaucrats and wading through red tape; it is called the merchant cash advance. This alternative to small business loans is available to most established businesses that generate a steady stream of credit card receipts. A merchant cash advance provider will simply purchase a portion of your future credit card receipts at a discount, and provide you a lump sum of ready capital you need to jump-start your business. Unlike small business loans that tie up your credit and may require you to put up collateral, the merchant cash advance requires neither. The amount you can be approved for depends on several factors, including how long you have been in business and your receipts volume. Once you are approved, you can have ready capital in your hands within a couple of weeks.
