fbpx

The Bad Name Business Cash Advances Has Earned. Is It Just?

Screen Shot 2015-03-17 at 9.18.17 PMWhen you hear the words “business cash advances,” you probably automatically cringe. In fact, I bet it wouldn’t be far off to say that the first thing that popped into your mind was something like high interest rates or money sharks. However, when it comes to borrowing money from a lender or getting money from an investor, it can often seem like getting money from an investor is a better idea. However, after closer examination, it’s interesting to see what happens after you crunch the numbers.

For example, you’re probably familiar with the popular TV show “Shark Tank.” On Shark Tank, business owners give a short presentation of their business idea, and then sell a portion of their company, and its earnings, to bigwig investors who see the value of the business that is being presented. If you haven’t seen the show, you can watch a quick episode here.

A few things you may notice right off the bat is the show is all about getting money to launch a business, even if it means taking desperate measures. In this particular episode, we meet Tod Wilson, who is trying to get money for his business, Mr. Tod’s Pie Factory.

Not to spoil the episode for you, but…SPOILER ALERT…Tod ends up giving 50% of his business away for few hundred thousand dollars. While he does get the money he is looking for to help keep his business afloat, he has committed to giving 50% of his profits to these investor sharks for the rest of his life.

The question remains, “how does a business cash advance get such a bad wrap, especially over bigwig investment sharks that require returns of up to 50% of your profits for the rest of your life?”

Regardless of how much you borrow from a small business loan center like a bad credit business loan, your interest rates will never be that high. And, yet, business cash advances are still the ones with the bad name?

Is that just? What do you think?

Perhaps one reason people justify selling huge portions of their company and a large chunk of their future profit to sharks is because they get prime time television exposure. While this does carry some weight in terms of marketing it’s important to decide if one time exposure (think of it as a one-time advertising campaign) is really worth over half of your company.

Next time you are wondering if you should go to an investment shark or to a bad credit business loan company, think of this. With a bad credit business loan company, you will get charged 20%-30% over 8-12 months and no equity. Then, you are done. Yes, that is maybe more than you would pay for a loan if you had excellent credit, but it’s certainly not 50% of your company and 50% of your profits for life.

Before taking drastic measures, make sure to do your research on where you will get the best type of business loan.