With small businesses providing over 50 percent of American jobs, it is obvious that there are many successful small business owners in the United States. The possibilities are endless when it comes to owning a small business, but just like a gardener can't enjoy his garden in full bloom until he cultivates the land and plants the seeds, a small business owner must sow lots of money into a business before she can reap the benefits of small business ownership.
The field of small business may possess great potential, and there may be a multitude of prosperous small business owners, but it is evident that many of these small business owners did not get to reach success on their own.
Many small business owners need outside help to finance the fundamental needs of their small businesses. And often, they do not have that money sitting in their pockets, waiting to be thrown into a small business venture.
True, it is not uncommon for small business owners to dip into their own personal saving and assets, and turn to friends and family for financing. But frequently, this money does not cover the total costs of owning and running a business, leaving them to seek-out additional financing, usually through a bank business loan.
But there is another type of financing that is also available for business owners who need additional funds. This process is called credit card factoring. Business loans and credit card factoring are similar in the most important way, that being they offer a way for small business owners to acquire business financing when their personal funds just don't cut it. But they differ in the areas of requirements, approval and funding time, and repayment processes.
To receive a business loan, a borrower will most likely be required to have an excellent credit score as well as collateral. The process can take up to several months from beginning to end, and payments are made as a fixed amount every month, applying interest and penalties, should the borrower be late or miss a payment.
Small business owners who utilize credit card factoring do not need a perfect credit score or collateral. There accounts can be funded in as little as ten days after approval, and payments are made through customers' credit card purchases; thus, eliminating the fixed monthly payments, interest rates, and penalty fees.
In a Business Week article titled "The Pros and Cons of Factoring," John Taulli writes, of the speed in which credit card factoring users can get their money, stating, "This can be critical when your company is in a crunch." He adds, "Additionally, there is no requirement for your company to have a credit check. That's because factors normally only want to evaluate the ability of your customers to pay."
If you don't meet the requirements for attaining a business loan, but you need additional funds for your business, credit card factoring could offer you and your business a great alternative.
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