Unfortunately, the year 2020 did not pass without leaving a trace for small businesses. Yes, the state tried to support business as much as possible, but these measures remained unrealizable for some.
At the federal level, only the affected industries and only SMEs received tax deferrals. In some areas, regional deferrals were introduced, but we often hear stories that tax authorities are demanding taxes be paid before the deferral expires.
Other measures (subsidies) are also not available to everyone. There is also concessional lending, but not everyone there had the opportunity to receive such loans.
Is it worth borrowing money for a business from a bank?
If there are no investors and no own funds that can be invested in the business, you can go to the bank for a loan. But banks do not want to take risks in 2021. In general, on the one hand, banks need to lend, and on the other, the borrower needs to prove that there will be no problems with debt. And this is not always possible.
Lending in a bank has one significant drawback – if you allow a large delay in payment, the bank can initiate bankruptcy proceedings immediately. In general, bankruptcy is quite a useful procedure (don’t be surprised), but is the game is worth the candle?
Any loan, especially secured, must be carefully studied and weighed all the pro et contra. And don’t forget about stress planning, in other words, “what will happen if the situation gets worse.” Even the procedure for obtaining a loan can be significantly delayed, and as you know, money is always needed promptly – here and now.
Can you get a loan without going to the bank?
Great news! Small businesses can apply for personal loans in Oregon online. They are usually unsecured, do not exceed $1,000 and have relaxed borrower requirements. True, according to statistics, 36% of companies take out short-term personal loans for business. When contacting an online lender, get ready for a rate higher than that offered by the bank. In Oregon, the APR is capped at 36%, lenders cannot charge more than this amount.
Another way is crowdfunding. In this case, the business is lent by investors – they invest in the project and get their own profit. There are special crowdfunding platforms.
A new way to borrow money for a business is Merchant Cash Advance which provides a business with a loan for future acquiring turnover.
If a small business generates a cash flow every day (sales), albeit in small quantities, then getting a loan for acquiring is a good option. Its essence is that the company is given a loan for business development, and it is returned as a percentage of transactions through acquiring.
A merchant cash advance comes with a quite high interest. Loan amounts usually range between $2,500 and $500,000. APR ranges between 10 and 350% APR. Repayment terms typically do not exceed 36 months. A merchant cash advance is a great option for a micro-enterprise, retail or service sector. For example, for a retail outlet, coffee shop or online store.