Are you looking for a small business loan? In today’s difficult financial market, many shop keepers, restaurant owners and retail businesses may find it very difficult to receive a traditional small business loan from their local banks.

Due to the recent economic recession, banks increased their underwriting standards and are simply not loaning out money to these small businesses despite the fact that they make up the majority of the economic powerhouse in the United States. Even though the Obama administration has done its very best to pump money back into the economy, it just doesn’t seem like it is getting to small business owner’s pockets.

A merchant cash advance is a good alternative to a small business loan. In a merchant cash advance the business owner sells his future credit card receivables at a discounted rate. The business owner only begins to pay back the small business loan (it is not a true loan but a purchase and sales agreement) only as he makes money through his credit card receivables. The lending company collects a percentage of the Visa/MasterCard sales until the small business has paid back the small business loan in full.

While a merchant cash advance is more expensive than a traditional small business loan from a bank, it is also an excellent method for merchants to open up a credit line with a funding source. This can be extremely important as all small businesses know. The money can be used as the business owner likes, whether it be to renovate, expand, marketing, purchase new equipment, or payback some bad debt.