Credit Card Factoring as an Alternative to Unsecured Business Loans

A great plus to unsecured business loans over conventional bank loans is that there is no collateral required to back them up. These unsecured business loans can be written on the basis of the credit history of the small business owner, and are often times referred to as signature loans. Still, unless you are on great footing with a private lender, or your business has an outstanding credit score, it is highly improbable that you will be approved for a very high loan amount - that is if you can manage to get one at all.

If your business's credit worthiness is not well built, but you yourself do have outstanding credit worthiness, it is likely that you may be able to get unsecured business loans with a personal promise. Still, this exposes your personal monies, as you become the payer of last resort if your day to day business functions cannot keep up with the loan obligations.

On the other hand, it is much easier to get working capital from Credit Card Factoring (a.k.a. business cash advance), which does not depend on your credit score because it is not a loan. Credit worthiness does not typically play a very large role in the approval cycle for a business cash advance, because it is repaid from the Visa-MasterCard receipts generated on a day to day basis by your business.

The business cash advance actually originates from the discounted purchase of a portion of your future Visa-MasterCard receipts by the lending company, so it does not need you to make fixed monthly payments like a conventional bank loan mandates. You should stay away from doing a contract with any business cash advance lending company that requires you to put up collateral or sign a personal guarantee - this is simply not necessary for this type of deal.

The approval rate for a business cash advance is astoundingly larger than that of unsecured business loans, and it is possible that you will be able to get a larger amount of working capital by this method, as well.