Bridge
390 posts since
Jun 3, 2008
1.
Re: business loan vs cash advance Jun 5, 2008 9:28 AM
This type of funding is also called factoring and many time low interest rates are advertised becasue they make up for it in "fees" instead. It is all the same - the cost to borrow the money. With "fees" the actually rate can be in excess of 20%.
Also look for early termination fees and minimum committment fees, etc. Look at total costs when evaluating options not just rate or closing costs.
I have never been a big fan of factoring as it eats into your profits too much - its like a big credit card. But some people love them. I would be nice if people on the board could share there experiences with this type of lending.
Develop a good relationship with your local banker. Where do you do your business banking? Have you ever met the loan officer? I would suggest setting up an appoinment and perhaps taking them out to lunch. Tell them you are looking to understand your options. You will probably find them very helpful as their job is to lend money.
That being said there are other alternatives to banks and some of them can be more flexible. Just do your homework.
