Cash Advance: Alternative to Business Loans

July 26, 2011 - PRLog -- New data released by national agencies suggests that bank loans create more debt in small businesses, diminishing their growth or even driving them to close their doors. On the other hand, reports from Merchant Resources International show a marked increase in applicants for cash advances.

According to a report from the Small Business Administration, small growth firms are more likely than no-growth firms to have lines of credit and receive funds from banks and other finance institutions. The same report also points out that the relationship between internal finances and employment growth is most relevant in smaller businesses. In addition, a Federal Reserve System’s report shows that in the 1st quarter of 2011 business debt rose by 4%, mainly because of loans.

Small businesses need funds to grow, but the borrowing of these funds is causing many of them to go into debt, exacerbating their financial problems. However, funds are necessary for business growth, including employment, inventory purchases, and cash flow.

This may explain why businesses that need to keep a positive cash flow, like restaurants, are turning to merchant cash advances to get the funds that they need. A merchant cash advance is faster, easier to qualify for, and easier to repay than a business loan.

In fact, data from Merchant Resources International shows that restaurants are the top businesses using cash advances to grow. Other businesses that also choose cash advances as a funding option include auto repair shops, grocery stores, retail stores, and service providers.

For more details, visit http://www.cashprior.com