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The offers are arriving by text, by email, sometimes by call, several a day for some small business owners, each promising money in your account by tomorrow with almost no paperwork. When cash is tight, that speed is hard to ignore.

Most of those offers are merchant cash advances. An advance is not a loan. It is a purchase of your future sales: a company gives you a lump sum today, then takes a fixed share of your receipts, usually every day or every week, straight from your account until it has collected the agreed total. That total is the advance plus a premium, quoted as a factor rate rather than an interest rate, which makes the real cost easy to underestimate. In the Federal Reserve’s most recent small business survey, 60 percent of owners who borrowed from online lenders said their costs ran higher than expected, against 37 percent at small banks.

Advances sometimes can fill a real gap. Banks have grown more cautious, and an advance can be approved in hours when a bank would take weeks or pass. The trouble is what comes after. However, it is important to keep in mind that since June 2025, an SBA loan can no longer be used to refinance advance debt, so the exit ramp many owners once counted on is closed. Those daily payments also count against the cash-flow math a bank uses to seize a loan, which means an advance can quietly disqualify you from the loan that would have replaced it.

The stronger position is the one you build when nothing is on the line. Owners with a real banking relationship land in a different part of the market than owners who go looking only once they’re stuck. In that same Federal Reserve survey, credit union borrowers reported the highest satisfaction of any lender type, and small banks approved the largest share of applicants in full. Local banks, regional banks, and credit unions tend to lend on relationships, so the time you spend before you need anything is the time that pays.

When you sit down, bring more than a request. Bring current financials, not just last year’s: a recent profit and loss statement and balance sheet, business and personal tax returns going back two or three years, recent bank statements, a list of what you already owe and on what terms, and your receivables and payables. Bring the purpose in plain terms, how much you need, what it buys, and how it gets repaid.

The most useful thing you can hand over is a one-page summary of the business in your own words: where it started, where it’s going, and why you’re there. A banker reads the rest of the folder faster, and more favorably, when someone has told the story first. Leave the gaps and the banker fills them with caution.

Underneath the paper, a banker weighs the same few things every time, the five C’s of credit: your character and track record, your capacity to repay, the capital you hold in the business, the collateral behind the loan, and the conditions around it. Our earlier piece Your Business Credit Profile Is More Than a Score covers the part of that picture you can build on purpose, over time.

Every question a banker asks is a version of one: how do I get paid back, and what happens if the first plan slips. Answer it before they raise it. Name the source that repays the loan, then name the backup if that source falls short. An owner with a clear repayment story is a different applicant from one who arrives with a need.

Preparation shows here too. An owner who comes in with three years of returns, current statements, and that one-page summary can be approved in days, while the same request without them can take weeks or stall. If your plan points toward an SBA loan, our earlier piece The SBA Loan Program Still Works. Getting Approved Is Harder. walks you through what those lenders weigh.

The owners who get a yes, and a banker who answers the phone when things tighten, are usually the ones who started early. Apply while the business is doing well rather than when it’s cornered; the application is easier to approve on the way up, and it leaves you a cushion. Keep your operating account where you plan to borrow, so your banker sees real deposits and cash flow instead of a single day’s snapshot. And when a hard month is coming, call before the payment is late. Lenders work with owners who tell them early.

None of this is fast the way an advance is fast, and that’s the point. The relationship costs the least to build when you’re not asking for anything, and it’s worth the most on the day you are.

The Co. Letter offers general information for small business owners and is not financial, legal, or tax advice. Before making a financing decision, talk with your banker, accountant, or attorney about your specific situation.

Have an interesting business question and need a free bit of advice? Send your question to [email protected]. No confidential info, please!