Get Working Capital Fast – Merchant Cash Advances aka MCA, Term Loans, Credit Lines, Equipment Financing, Invoice Factoring
I am Business Loan Randy, and I will act as your business loan consultant (100% ITEX) to position you in the best possible scenarios to receive funding for:
- Merchant Cash Advance aka MCA
- Accounts Receivable Factoring
- Equipment Financing
- Term Loans
- Credit Lines
- Business Credit Cards
If you have been turned down already by a bank, we will put a plan together to get you approved. I have different tiers of lenders that handle all levels of risk.
My 150 lenders all use the same one-page application form, so you name the financing I can get it for you. And evern better news this is a soft credit putll that does not affect your credit.
Let’s Get Started!
I will work with you to position your business in the best light and give you strategies as needed to improve your business and personal credit scores and review your documentation. I will learn about your business so I can explain your situation to underwriters.
Write me at randy@businessloanrandy.com (Please put ITEX in the subject line) or text me at 530.802.1904 to set up a time to talk
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Below are detailed descriptions of funding types available.
Equipment Financing
Equipment loans help you buy equipment for your business, sometimes including semi-truck financing, office equipment, stationery machinery, etc. An equipment loan's term typically is matched up with the expected life span of the equipment, and the equipment serves as collateral for the loan. Rates will depend on the value of the equipment and the strength of your business. The key item to think about is ROI (Return on Investment). If you buy a $400,000 excavator, will your revenue exceed the monthly payments?
Pros:
- You own the equipment and build equity in it.
- You can get competitive rates if you have strong credit and business finances.
- Likely you can get depreciation and/or investment credits for your tax bill.
Cons:
- You may have to come up with a down payment.
- Equipment can become outdated more quickly than the length of your financing.
- As opposed to renting the equipment you will be responsible for the equipment maintenance.
Best for:
- Businesses that want to own equipment outright. I personally love to own my equipment outright.
Merchant Cash Advances
A MCA (Merchant Cash Advance) gives you a lump sum of cash up front that you can use to finance your business. Instead of making one fixed payment each month from a bank account as you would with a term loan, you make payments on a merchant cash advance either by withholding a percentage of your credit and debit card sales daily, or by fixed daily or weekly withdrawals from a bank account. Merchant Cash Advances are VERY FAST MONEY, but costly. Upon approval you can expect a wire transfer the next day and sometimes the same day. How does it work?
Let's imagine that you have on average $50,000 a month in credit card receipts. You can expect to be able to borrow 80% of this amount or $40,000. Again, this is a crazy fast turnaround to receive the funding.
The term for example may be for 8 months. On a daily basis (sometimes weekly) the lender will take an agreed upon amount of your daily deposits such as 15% until the loan is paid. It is very different than a traditional loan - it fact is it not considered a loan but a cash advance. If your receipts are $1,000 today, then the lender will take $150 of it. If sales are slow tomorrow and you only bring in $200, then the lender will take $30.
Merchant cash advances are not stated as an interest rate but as a factor rate. Typical factor rate is 1.35 to 1.50. If you borrow $100,000 and the factor rate is 1.35 then you will repay a total of $100,000 x 1.35 = $135,000. Like I said, very fast money to receive but not cheap money.
Pros:
- Fast cash, usually easy to qualify for.
- Unsecured financing so no collateral required.
- Low credit scores are OK. Security is against your future receipts.
Cons:
- Very expensive borrowing costs - usually very high interest rates.
- Frequent repayments can create cash flow problems.
Business Lines of Credit
A business line of credit provides access to funds up to your credit limit, and you pay interest only on the money you’ve drawn. It can provide more flexibility than a term loan. This is excellent to have in your back pocket to cover short-term cash flow needs. For example, you are waiting for a check for an $80,000 invoice to be paid, but you need $20,000 for payroll this Friday, you can instantly tap into your line of credit and then solve the problem.
Pros:
- Flexible way to borrow.
- Typically unsecured, so no collateral required.
Cons:
- May carry additional costs, such as maintenance fees and draw fees.
- Strong revenue and credit required.
- You will need a good credit score
Best for:
- Short-term financing needs, managing cash flow or handling unexpected expenses.
- Seasonal businesses.
Merchant Cash Advances
A MCA (Merchant Cash Advance) gives you a lump sum of cash up front that you can use to finance your business. Instead of making one fixed payment each month from a bank account as you would with a term loan, you make payments on a merchant cash advance either by withholding a percentage of your credit and debit card sales daily, or by fixed daily or weekly withdrawals from a bank account. Merchant Cash Advances are VERY FAST MONEY, but costly. Upon approval you can expect a wire transfer the next day and sometimes the same day. How does it work?
Let's imagine that you have on average $50,000 a month in credit card receipts. You can expect to be able to borrow 80% of this amount or $40,000. Again, this is a crazy fast turnaround to receive the funding.
The term for example may be for 8 months. On a daily basis (sometimes weekly) the lender will take an agreed upon amount of your daily deposits such as 15% until the loan is paid. It is very different than a traditional loan - it fact is it not considered a loan but a cash advance. If your receipts are $1,000 today, then the lender will take $150 of it. If sales are slow tomorrow and you only bring in $200, then the lender will take $30.
Merchant cash advances are not stated as an interest rate but as a factor rate. Typical factor rate is 1.35 to 1.50. If you borrow $100,000 and the factor rate is 1.35 then you will repay a total of $100,000 x 1.35 = $135,000. Like I said, very fast money to receive but not cheap money.
Pros:
- Fast cash, usually easy to qualify for.
- Unsecured financing so no collateral required.
- Low credit scores are OK. Security is against your future receipts.
Cons:
- Very expensive borrowing costs - usually very high interest rates.
- Frequent repayments can create cash flow problems.
Business Lines of Credit
A business line of credit provides access to funds up to your credit limit, and you pay interest only on the money you’ve drawn. It can provide more flexibility than a term loan. This is excellent to have in your back pocket to cover short term cash flow needs. For example, you are waiting for a check for an $80,000 invoice to be paid, but you need $20,000 for payroll this Friday, you can instantly tap into your line of credit and then solve the problem.
Pros:
- Flexible way to borrow.
- Typically unsecured, so no collateral required.
Cons:
- May carry additional costs, such as maintenance fees and draw fees.
- Strong revenue and credit required.
- You will need a good credit score
Best for:
- Short-term financing needs, managing cash flow or handling unexpected expenses.
- Seasonal businesses.
Term Loans
A term loan is a common form of business financing. You get a lump sum of cash up front, which you then repay with interest over a predetermined period. Online lenders offer term loans up to $1 million and can provide faster funding than banks that offer small-business loans.
Pros:
- Typically allow you to borrow a higher amount than other types of loans.
- Funding is fast if you use an alternative lender rather than a traditional bank, typically a few days to a week versus up to several months.
Cons:
- May require a personal guarantee or collateral.
- Costs can vary depending on the lender.
Best for:
- Businesses looking to expand.
- Borrowers who have good credit, good revenue, and who don’t want to wait long for funding.
Invoice Factoring
Let’s say your business has unpaid customer invoices, which are typically paid in 60 days. If you need cash now, you can get money for those unpaid invoices through invoice factoring. You would sell the invoices to a factoring company, which would be responsible for collecting from the customer when the invoice is due. You could for example sell $100,000 of invoices that are due in 60 days. Lender will typically charge a discount of 1 to 3 percent. In the case of 3 percent, you would receive $97,000. If the company your are billing then does not pay for another 60 days this discount, then applies again. It is a little more complex than this with sometimes holdbacks, etc. but this is the high-level idea. Once set up, you turn in your invoices to the lender, and you will get paid within a few days. Again, not cheap money, but very fast money on an ongoing basis. This is very popular with trucking and construction company. You must be billing companies and not individuals.
Pros:
- Quick cash.
- Easier to qualify for than other traditional funding options. The integrity of the companies that you are billing is more important than your credit score.
Cons:
- Costly compared to other funding options.
- You lose control over the collection of your invoices.
- Typical these are recourse loans. If you client goes bankrupt what you have been paid in advance may get clawed back.
Best for:
- Businesses with unpaid invoices that need fast cash.
- Businesses with reliable customers on long payment terms
Business Credit Cards
Business credit cards are revolving lines of credit. You can draw from and repay the card as needed, as long as you make minimum monthly payments and don’t exceed the credit limit. They may or may not be secured with your personal guarantee. Some startups use the concept of credit card stacking. This is where you apply for multiple credit cards and then stack them together for the financing that you need. To avoid high interest costs, the strategy is to find new cards that have a 0% interest rate for 6 to 12 months and keep moving the balances around.
That aside, Business Credit Cards are typically best used for financing ongoing expenses, such as travel, office supplies and utilities. Pay them down monthly or as quickly as possible.
Pros:
- Earn rewards on your purchases. These can be frequent flier miles or cash rebates.
- No collateral required
Cons:
- High cost, with a variable rate that may rise.
- Extra fees may apply.
- If you are not diligent about your finances, you will soon end up with a stack of maxed out credit cards at very high interest rates. I have been in this situation - try to avoid it!
Best for:
- Ongoing business expenses.