Online Businesses- Alternate Loan
Sources For Urgent Working Capital Needs
Online Businesses, E-commerce businesses,
Internet Companies, whatever you may call them have become a force to
reckon with as far as small businesses are concerned. Working capital
is a very relevant term for any business. However, as far as online
businesses are concerned, extra working capital is always something
that they need to work on.
These businesses face a lot of pressure
from others in the same field, from higher expectations from their
own customers, or advancing technology that forces them to adopt
newer techniques. So, basically, their working expenses vary from
purchasing new machines, repair or replacement of existing assets,
expanding the scale of business, the introduction of new products or
Being an online business, the need for
working capital and cash is critical, maybe more than any regular
small business. They need to stay at par and many time above the
competition. Some of the reasons why these alternate sources of loans
are more important for Online Businesses are:
Stocking and buying of inventory are critical to the success of any
internet company. A small delay or mistakes in sending products or
services to customers will affect the goodwill and success of the
company. Inventory keeping requires cash, hence the need for
understanding and using assorted options.
Assuming your business is an E-commerce site, technology will be a
critical link to your business. Understanding the technology in your
industry, making the required changes to existing set-up or investing
in innovative technology where required intensifies the need for
quick cash. You do not want to be left behind when your competitors
are surging ahead.
With recent advances, marketing has changed immensely. Customers are
targeted based on a deeper understanding of their needs. Marketing
online is whole other ballgame and you must invest in this area to
support and boost your growing company.
All expenses require some sort of help-
typically, the usual way of arranging for funds is the bank. Here,
you go through the process of an application and an examination of
your capacity to borrow. Once the bank is satisfied, the loan is
processed. Why businesses do not prefer bank loans and look for
-Generally, this takes so much time that
the purpose is lost by then. Therefore, you must explore alternate
forms of credit to suit your needs.
-Another deterrent from approaching banks
is that those that have Poor credit, Insufficient balances in their
account almost never get approved for a loan.
- In many cases, before you repay the
first loan, your business requires further cash and banks will never
positions. There are many alternate forms of credit where current
loans may be purchased back and further positions created.
Merchant Cash Advance:
Business Cash advance is money that is paid upfront as an advance to
businesses that require quick cash as working capital. This money is
repaid through future income through credit card receipts. To get
this loan, businesses need to show proof of sales through credit
card, hence the name credit card factoring. There is a factor rate
involved which is used to calculate the cost of such an advance.
However, the advantage is that you can repay depending on the credit
card sales- low or high. Online businesses need quick influxes of
money and sometimes steadily. If you are unable to get a revolving
credit worked out with a bank, you can use this options as 1st,
positions are also available for this kind of an advance. It is more
like an unsecured business loan without the lengthy terms and
Purchase order Advance:
Business Funding is an ever-evolving subject, with many options
available. It is important to find alternate funding solutions for
any business and not restrict themselves to bank loans alone.
Purchase order Funding is another unique way to source quick money
without the hassles of dealing with the bank and the paperwork. How
this works is that based on the purchase orders you have secured for
your product or service; an amount is approved. It is easy to
qualify, and sometimes you can even qualify for a 100% funding.
has become popular with the onset of the internet and social media.
The amount of money needed is sourced through people contributing
towards your cause, project or a problem. Typically, where there is a
risk involved, banks do not want to risk giving you a loan or they
will provide you the sum at a much higher rate of interest. So, the
costs will increase substantially. The number of options for funding
for a business will depend upon the amount and the term- short-term
or long-term. The biggest deterrent for bank loans are the terms and
conditions that go along with any loan. Especially so, when they are
collateral loans or commercial loans. The procedures and the
precautions the banks take are lengthy.
The banks have always been our one source
of funding- be it secured or unsecured loans. However, with changing
times, there are so many options to get cash without having to wait
or go through the lengthy procedures. Your business can really
benefit from using all the options.