Bank Loans vs Leasing vs Cash Advances

Many business owners have been turning to leasing as an alternative to bank loans.  Now, more and more businesess are also tapping into small business cash advance services as a financing solution.  Cash advances can be used either in combination with or in place of leasing.

The following list takes a quick look at various aspects of bank loans vs. alternative financing options available: leasing and business cash advances.

1) Qualification Requirements

Bank Loans – Most small businesses will not qualify for a bank loan, and even if they can, it takes time for the loan to be approved.  Generally, to apply for a bank loan, the customer must submit corporate tax returns for the prior three consecutive years.

Leasing – Leasing is much quicker than purchasing using a bank loan.  It is also easier than getting a bank loan and more realistic for younger companies, or companies with no credit or bad credit.

Cash Advance – The only requirement for a business cash advance is that your business has been accepting credit card payments for a minimum of four months.  This is the easiest type of financing to qualify for, and it is much quicker than getting a bank loan.

2) Deposits

Bank Loans – When purchasing equipment, you will generally have to pay a 50% deposit upon placing your order.  Because it takes more time to get a bank loan, this means you cannot even ORDER your equipment until you have been approved for your loan.

Leasing –  No deposit is required.  The extra cash freed up can be used for other parts of your business.

Cash Advance – Cash advance can get you cash quickly, so you can afford to pay any deposits your vendors may require upon placement of an order.  If you are using business cash advance to pay for leased equipment, then there is no deposit.

3) Risk – Liens/Collateral

Bank Loans – When a bank gives you a loan, they will place some of your major assets on lien. 

Leasing – The equipment being leased is pledged as collateral. 

Cash Advance –  Cash advance requires NO collateral and NO liens

4) Down Payment

Bank Loans – Bank loans can call for up to a 40% down payment.

Leasing – Requires smaller down payment than bank loans.

Cash Advance – Requires NO down payment whatsoever.

Check here for more information on  Small Business Cash Advance.

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