How Important is Personal Guarantee to you?
No Personal Guarantee Working Capital
Misconceptions about the difference between business cash advance, business loans, and personal guarantee. Business cash advance financing versus small business loans have similarities but only in their approval process and funding process, consequently, differ in many ways.
A business cash advance is a form of lending, but, technically not considered a loan but rather an advance against future revenue whether its credit card sales, invoice receivables or purchase orders. Unlike banks, business cash advance lenders do not report to the three major credit bureaus once the advance has been originated. Owners can technically default without any repercussions from any future responsibilities; except, intentionally misleading the application, intentional frauding, or intentional breach of contract.
As a result, a most merchant cash advance doesn’t have personal guarantee requirement on them.
Now compare that to the traditional bank loans. Most banks report to credit agencies. This is a big plus for small business owners wanting to build credit. Now the reason it’s a big plus is that small business owners also own homes, buy business equipment, buy cars, and when applying for these, a good payment history advantage is clearly visible. So if a small business owner wants to refinance their bank lines, lease new equipment including buying a personal assets with good payment history allows them to take advantage of all the benefits of having good credit.
So when borrowing, lenders will need some security to minimize their risk. More security less risk for the lender. Less security means higher risk for the lender. No personal guarantee means high risk for the lender, therefore, not only it decreases your chance of getting approved, but it will also increase your cost of borrowing.
Although business cash advance companies do not require a personal guarantee, they do file a UCC against the business, though, this does not show up on the small business owner’s personal credit. No Personal guarantee gives you a little flexibility in your personal assets. So how important is no personal guarantee to you?
To apply for no personal guarantee business cash advance, please click here.
Even if you already have a source for funding for Liberty Capital Group, Inc., it’s always good to know what your options are as there are constantly newer more advanced funding alternatives. Liberty Capital will show you the most up-to-date options best that fit your business needs.
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