Here’s a fundamental truth of any organization: you need cash to help grow your business. Whether you’re a start-up, a sole proprietorship, or a limited liability corporation, getting a small business loan will be one of your top priorities. Unfortunately for many new and small businesses getting the cash needed to grow can be difficult and costly.
It used to be that the only way to gain access to cash were to go to banks which had their own difficult and long process, time you nor your business has. Luckily in this new economy other options for small business funding have popped up.
Personal Asset Lending allows you to use assets like cars, equipment, and jewelry to get working capital for your business. Loans against art and other valuables can also be used as collateral.
Most small businesses do not have extra assets or equipment just laying around. In cases like that a merchant cash advance can be a beneficial and flexible option to obtain working capital needed to grow.
A merchant cash advance, more commonly referred to as an MCA is simply a purchase of future credit card sales.
A typical bank loan requires fixed monthly payments and doesn’t take into account the fluctuation of seasonal sales. If things are slow a business can struggle to make the payments at detriment to the growth the loan was originally supposed to foster. A MCA is based on percentages of sales allowing leeway during a time when sales are low.
Merchant Cash Advances are also easier to come by than a bank loan. The application process is much shorter and a business can have their money in as little as twenty four hours.
If presented with the option of getting a pension check for life or getting a lump sum, what’s the better deal? This is a decision that should be weighed carefully and because each individual’s financial status is different, there is no cookie cutter way to decide which option is best.
Getting a monthly annuity certainly has a certain allure — you get a steady paycheck for life.
But getting a lump sum can be a more attractive option if you manage the money well. Why? The biggest drawback of an annuity payment is that pensions are rarely indexed for inflation. At an annual 3 percent inflation rate, a monthly check worth $2,000 today would be worth $1,488 in 10 years, and $1,107 in 20 years. That’s a huge reduction in purchasing power.
Also, it’s not the best time to arrange for a pension check because annuity payment calculations are based on prevailing interest rates. In a low-interest rate environment like we have now, getting an annuity would involve locking in a low rate of return for the rest of your life.
Taking the lump sum allows you to invest the money for the short term until interest rates are more favorable because of the flexibility and the power to invest aggressively to make your money last longer.
If you are in debt or have large expenses, getting a lump sum cash payout can save you money on interest payments.
What do you do if you are stuck with an annuity or structured settlement and need cash now? There are services that allow you to borrow against your annuity in whole or in part. This is an especially cost effective option if that money can save you from bankruptcy, foreclosure or any number of financial emergencies that may arise.
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