Many times, our clients are "unbankable," meaning they simply do not qualify for institutional financing, or SBA criteria for one reason or another. Maybe they don't have a high enough credit score, or perhaps they have a troubled credit history, lack collateral, under 2 years in business, in an industry that banks don't typically lend to, have unbalanced debt & cash flow ratios, or file losses on their tax returns.
But what about the lucky few, who made it through the SBA or currently have bank loans, although require additional capital that their bank is unwilling to provide. LVRG helps small to mid-size companies with revenues up to $25MM, that need additional cash flow but are so encumbered by their bank, that they cannot obtain additional financing elsewhere. What's more, we are able to subordinate to your bank lien UCC filings. Banks are concerned about positive ratios, while we are more interested in cash flow and overall revenue.
If your small to mid-size business is growing, you may find yourself needing extra cash to cover day-to-day expenses such as payroll, rent and inventory, or to pay for short-term projects that could grow your revenue in the long run. Uneven cash flow is one of the biggest challenges of small to mid size businesses throughout all industries. In a perfect world, if you already have bank loans, you’d walk into your bank and simply ask for more capital. Well, that typically turns into an exercise of frustration. It's hard enough to get bank financing as it is these days, so the chances of you obtaining even more capital from them is pretty slim. Not to mention, do you really have time to compile another bank loan package and wait up to 6 months to receive funding, for something that you need to move on quickly?
In order to deal with this shortfall, revenue based financing and cash flow loans may be your best option. For this type of business financing, lenders provide funds and use your future expected cash flow as collateral for the loan. You’re essentially borrowing from cash that you expect to receive in the future by giving the lender the rights to a predetermined amount of these receivables. These are primarily used for working capital or take advantage of short-term ROI opportunities. Your credit scores will usually be checked, but they play less of a role. As the name indicates, the lender is more concerned with inspecting your cash flow (usually bank statements) to approve your application. Turnaround time is another great feature of revenue based financing and cash flow loans, as funding usually takes place in a matter of days.
A cash flow loan may be used for any business expense, but some common uses are:
- Working capital
- High ROI short-term opportunities
- Purchasing highly-discounted inventory
- Business expansion
Revenue based financing and short-term cash flow loans are best used for short-term projects that would divert money from day-to-day expenses but ultimately grow your business, like taking on a big contract with a major company or adding extra seating in your restaurant. If you need cash fast, a revenue based loan or cash flow loan may be your lifeline.
LVRG Funding is one of the nations largest and most trusted resources of revenue based financing and cash flow loans. Want to know if revenue based financing or a cash flow loan is right for your business, give us a call (855) 998-5874. We're here to help!