Small Business Owner Declined Bank Loan

Yet another example of a small business owner who was declined by her local bank this December, Hope Gillerman was denied a $100,000 bank loan from Park Avenue Bank. Ms. Gillerman owns a small business which sells aroma therapies in Union Square New York City. Her company has yet to show a profit, but she has had growing sales over the past year.

In truth it is reasonable for banks to be hesitant to invest in these types of small retail businesses in the current economic crisis. Banks have other fish to fry, like billions of dollars worth of loans to pay back TARP government money, and defaulting mortgages. Why should a bank invest in a risky small business that has not turned over a profit yet?

This is precisely the type of business that should seek out a merchant cash advance. New retail shops, restaurants, and salons that are looking to expand and infuse working capital into their businesses aren’t going to be able to receive financial funding from banks. There is simply too much risk that these businesses won’t be able to pay back a loan over the course of a few years. There is a greater chance that these types of businesses will no longer be there in a few years.

Ms. Gillerman could obtain a significant amount of working capital for her business by applying for a merchant cash advance. A merchant cash advance is a short term “lending” program, whereby the private lender purchases the merchant’s future credit card receivables at a discounted rate. The amount of money the merchant qualifies for is based on how much they process in Visa/MasterCard generally over a span of one year. From this the private lender can predict how much the merchant will be processing in the future, and can build a program whereby he can expect to be paid back within usually four to nine months. The funding is more expensive than traditional bank loans, but it can help many businesses who are seeking to expand, pay dept, or just have some extra cash when businesses is tight.

To read the original New York Daily News article click here!

To apply for a merchant cash advance click here!