Revenue Based Loans

Small Business ACH Loans. What Are They and How Can They Benefit My Business?

What is an ACH Small Business Loan and How Can it BOOST My Business?

For starters, an ACH small business loan can also be referred to as a small business cash flow loan, small business revenue based loan or a small business merchant cash advance. The ACH designation really applies to how the lender is paid. ACH or Automated Clearing House, refers to the lenders ability to withdraw an agreed upon amount directly from your checking account at agreed upon intervals, typically daily or weekly. This is different from factoring your accounts receivable (A/R), because instead of billing your customers and collecting from them, they directly access your checking account in much the same way automated payments might go to you mortgage lender or a utility company from your personal checking account.

An ACH small business loan, much like factoring or an MCA loan, should be considered a small business short-term financing option. The cost of the capital is more expensive, in other words you’ll pay a higher interest rate, but you’ll be able to access that capital much quicker than a traditional term loan from the bank or other financial institution.

Because a small business ACH loan lender will be able to pull your payment directly from your checking account, it reduces risk to the lender making it possible for small business owners with a healthy checking account but less-than-perfect credit to get a loan.

The Automated Clearing House (ACH) is a network for processing electronic credit and debit transactions in the United States. An ACH debit transfer occurs when you explicitly allow a third party (a vendor, merchant, or a lender) to have direct access to your business checking account to withdraw funds agreed upon by you. Roughly 90 percent of all electronic payments are handled through the ACH network, and include direct payroll deposits as well as electronic payments.

Many small business loan lenders prefer to accept your business loan payments through an ACH transfer directly. If your mortgage, or an automobile payment, is pulled directly from your checking account every month, an ACH or electronic small business loan payment works much the same way.

For example, most small business revenue based loans, business cash flow loans and online small business lines of credit come with either a fixed daily (every business day) or weekly ACH payment. Repayment for a small business line of credit is automatically deducted on a weekly basis. While some lenders still accept payment by check, electronic payments have become increasingly common, particularly with online lenders.

Electronic Payments are Good for the Lender and Good for the Borrower

A daily or weekly ACH debit makes sense for lenders because it reduces the costs associated with processing a loan payment, ensures that payments are made in a timely fashion, and makes it possible for the lender to identify potential repayment issues within a couple of days, rather than several weeks—giving them enough time to try to help borrowers get back on sound financial footing and meet their commitments.

  • ACH payments save the business owner money - roughly $1.22 per check

  • It is convenient for the borrower who doesn’t need to take the time to write a check (particularly if the ACH debits are scheduled and automatic)

  • The regular and timely payments help build and maintain a strong business credit profile

Daily or weekly debits, as opposed to a monthly debit, reduces the size of each periodic payment making it easier for many borrowers to smooth their cash flow and avoid contributing to “lumpiness” in having large expenses due at the end of the month. This type of electronic direct debit makes capital available to some borrowers who might not qualify within a more traditional payment model.

Making ACH Business Loan Payments Work for Your Business

Millions of ACH transactions happen every day, but that doesn’t mean much if you can’t make it work for your business. With that in mind, here are 3 things that will help you do just that:

#1. Make sure you have the right kind of cash flow to accommodate the periodic payment frequency. If most of your monthly revenue is attributed to a handful of customers that make payments at the end of every month, a daily or weekly ACH pull from your business checking account might not work and may disqualify you from some loan types. This is one reason most online lenders want to see the last three or four months of bank statements. They want to make sure your cash flow will support the debit frequency (daily or weekly).

#2. Make sure you understand the amount that will be pulled with every periodic payment: A fixed payment will likely be easier to budget for. You’ll also want to determine if payments are only made on weekdays or if they will also take place on the weekends. The more you understand about the process upfront, the better you will be able to budget and prepare for each periodic payment.

#3. Make sure you understand what happens if you don’t have sufficient funds in your account: Nobody wants this to happen, but if it does, what does that mean for your loan? Making sure there is always enough in the account to make the automatic payment needs to be a priority, but sometimes circumstances might leave a business owner short. Most of the time, you’ll know before the payment is due. If that’s the case, reach out to the lender before the payment is attempted to try to make other arrangements.

Making payments electronically is an innovation designed to make small business loan payments seamless and easy for both the borrower and the lender. Ready to see if an ACH small business loan makes sense for your business? Call (855) 998-5874 or click below.

 

Bad Credit & High Risk Small Business Loans to BOOST Holiday Revenue. Poor Credit Fast Business Cash!

Owners of small and medium-sized businesses often face one common challenge. They need capital to grow and strengthen their businesses, but bad credit may be holding them back. Forget trying to get a loan or line of credit from a “traditional” financial institution. Banks are just not lending to small businesses; and if you have bad credit or in a high risk industry, you can guarantee a rejection for bank financing.  

Bad credit and high risk business loans are offered to high risk business owners, or to those folks who have bad credit which make them ineligible for any type of bank financing. There are only a few small business funders who offer bad credit and high risk business loans, and LVRG leads the way.

Businesses need capital to grow, plain and simple. Today’s business owner is constantly on the lookout for growth opportunities and must move quickly to take advantage of them. An opportunity for an acquisition or expansion can arise suddenly and needs an immediate response and immediate cash. There’s also the need to purchase equipment or inventory. And of course, there will always be emergencies and cash flow gaps that need to be quickly managed with working capital.Our bad credit business loans and high risk business loans were developed with small businesses in mind and provide a number of clear benefits:

  • Shorter terms, usually 4-12 months

  • Simple repayment terms

  • Quick turnaround, as in approval, underwriting and funding

  • Fast access to funds, with money in your account in as little as 24 hours

  • Quick and easy application process; little paperwork required

We don't care about your credit, or your industry for that matter. In fact, we look at so much more beyond your credit history:

  • Is your business growing?

  • Are there growth opportunities ahead that financing will help you leverage?

  • Are you paying vendors?

  • How is your cash flow history?

We've found that poor credit history is not a good predictor of future business growth or success. Instead, it’s knowing when to seek business financing and having a plan for how you’ll use the capital to generate more revenue or accelerate it. Bad credit and high risk business loans more than pay for themselves when you factor in the additional revenue they help generate and business costs they can save.

There are many reasons why traditional lenders choose to classify a business as a high risk when it comes to borrowing money. Some typical high risk businesses are restaurants, construction companies, many seasonal and cyclical businesses. Even most new or young companies are considered high risk simply because they do not have a track record or proven sustainability. LVRG Funding has experience lending to high risk business owners, we understand that many of these companies are proven earners and deserve a small business loan regardless of their industry, credit history or time in business.

What are some options for small business owners with poor credit or in a high risk industry that need business cash fast for the holiday season?

#1. Small Business Revenue Based Loan - A small business revenue based loan could be your businesses lifeblood and provide it with several financial benefits. When your business is growing, chances are you'll need an injection of cash to continue its growth. Bank loans are often times too restrictive and near impossible to obtain these days anyway. In this situation, a revenue based loan may be the best solution, especially if you are in a high risk industry, have minimal time in business, lack collateral or have credit challenges. If you use it wisely, a revenue based loan could do wonders for your small business. Without being capitalized, chances are you will wind up in a growth stalemate and a revenue based small business loan may be a perfect option for you.

If your business is under 2 years old and starting to scale, you obviously want to ride the wave. You cannot do this without a dependable source of capital. Bank criteria is typically a minimum of 2 years in business, strong cash flow, positive ratios and perfect credit. However, revenue based loans are offered based off revenue and cash flow, not credit or collateral. Many times, your bank statements are enough to demonstrate that you can repay your loan.

A revenue based loan could be highly advantageous for your business, and quite simple to obtain no matter what your credit score, collateral or time in business. It helps you grow your business quickly and it does not saddle you down with long-term, highly encumbering debt. It gives you the cash that you need quickly, to grow your business your way. What more could a growing business need?

#2. Poor Credit Business Cash Advance - Poor credit business cash advances are offered to small business owners with poor credit, or those who have credit issues, bankruptcies, judgments, etc. There are only a few small business lenders that are willing to fund high risk merchants, and LVRG leads the way. Poor credit business cash advances are available to businesses that have been classified as high risk, and are therefore unable to obtain bank loans or any other form of financing from traditional lending institutions.

A poor credit business cash advance can provide small business owners with poor credit an upfront fixed amount of cash, up to $1,000,000 in as little as 24 hours. The funding amount is based upon a percentage of the businesses credit card receivables or daily cash balances using historical credit card receipts and bank statements to determine the initial advance. The business pays back the advance, plus a percentage, often referred to as a discount factor or hold-back, from a portion of their credit card receivables or cash receipts. The remittances are drawn from the small business owner on a daily, or weekly basis, until the obligation has been met. This is a highly streamlined and simple solutions, to get cash in the door quickly.

#3. Poor Credit Small Business Cash Flow Loan - Even if your small 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 businesses throughout all industries. For this type of business financing, lenders provide you 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. 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 a cash flow loan, as funding usually takes place in as little as 1 day in some cases.

One of the greatest benefits of a poor credit small business loans, revenue based small business loans, or a bad credit business cash advance, is that the funds can be used for a host of business expenses. There are typically no restrictions on how you choose to use your capital, however some of the more typical uses include:

  • Buying Equipment – Could a new computer, desk, telephone, cash register, POS system or software come in handy? Money to pay for the purchase of necessary business equipment could help boost your profits.

  • Paying Employees – Instead of running your business like a one-man show, a few extra hands could really help. Spending borrowed money on employee’s salaries can be the answer rather than disrupting your cash flow to cover this expense.

  • Purchasing Inventory – One of the most common uses for high risk small business funding is buying inventory. It takes products in stock to make business profitable, so it only makes sense to invest in enough inventory to make sure you always have enough to sell to customers.

  • Expanding the Business – If your business is experiencing some success, you might want to start thinking about taking things to the next level. A lump sum of immediate cash might be just what you need to get business booming.

Bad credit and high risk business loans can provide high risk small business owners with an upfront fixed amount of cash of up to $1,000,000 in as little as 24 hours. The funding amount is based upon a percentage of the businesses credit card receivables or daily cash balances using historical credit card receipts and bank statements to determine the initial advance, or loan. The remittances are drawn from the business customer on a daily or weekly basis until the obligation has been met.

Whether you have cash flow issues, history of liens, judgments, or even a bankruptcy... you can still get up to $1 Million to grow your business in as little as 24 hours. Get the funding you need to make this the business holiday season ever! Short term small business loans, bad credit small business loans and high risk business loans from LVRG have helped thousands of businesses just like yours not only turn the corner, but pull ahead in the race. Bad credit or not, we’re here to help your business grow. Call (855) 998-5874 or click below to get started.

MULTIPLE FUNDS MUST BE DEPLOYED AND OFF THE BOOKS BY THE END OF THE YEAR. WE HAVE TO GET THIS CAPITAL OUT ASAP. FINAL PUSH OF 2016. THE TIME IS NOW!

 

Revenue Based Financing, Cash Flow Loans & Working Capital Solutions to Boost Your Business... Your Way!

Nobody faces more challenges on a daily basis than business owners. In fact, for owners of small and medium sized businesses, handling many different challenges is the source of great satisfaction and some headaches, too.

But when business owners are asked to name their greatest challenge, one thing tends to top the list most often; accessing working capital to manage cash flow. In other words, making sure there is enough capital flowing in to cover everything that needs to flow out.

There are a variety of reasons why cash flow can be a steep challenge for small business owners. Needs can precede revenue. Or perhaps you’re getting paid more slowly than you’d like. Or if you’re a seasonal business, a garden center, for example, or specialize in hardy, cold weather clothing and you have peak sales months which require that revenue to stretch across your off-season months.

Often, business owners can optimize cash flow by negotiating longer payment cycles with creditors and encouraging debtors to pay in shorter time periods. But there are other solutions that can help you sail through the lean months with plenty of working capital on hand: a short term business loan, cash flow loan or merchant cash advance. 

You can put small business financing from LVRG “to work” immediately for your business, whether it means meeting payroll for a few months, negotiating a great deal on inventory for paying in cash or hiring and training those new employees you need. Our business financing solutions can help you operate without missing a beat or even take advantage of an unexpected or one time business opportunity. 

Some of the common reasons a business owner will seek financing are:

  • The purchasing of equipment in order to grow the existing business or the purchase of stock to expand the business
  • Improving the business’ credit by allowing the owner to pay off other loans
  • Marketing the business via a specifically designed campaign
  • Renovating the premises or expand them in order to raise the business’ current earning potential
  • Purchasing new property for the business to expand to
  • Staving off financial stagnation during periods of slow business

Benefits of revenue based financing and cash flow loans:

In addition to the much easier method of obtaining working capital from LVRG, as opposed to a bank, revenue based financing, cash flow loans and merchant cash advances have a lot of incentives when it comes to small business financing:

  • Much quicker approval times from LVRG as opposed to a bank. This translates to faster cash-in-hand, allowing you to take advantage of current market prices.
  • Whereas business loans require you to have collateral in order to gain favorable consideration, a revenue based loans or MCA simply requires you to be subject to a limited amount of conditions.
  • A cash flow loan or merchant cash advance is also much more beneficial to the cash flow of a company since it does not require any monthly payments or upfront fees that are characteristic of loans.
  • There is no limitation on how the funds acquired from a cash flow loan or MCA can be used. Funds that are loaned through a financial institution must be used for the stated purpose by the business. As a result, money from a business loan has a very narrow scope of action as compared to money that comes from a cash advance.
  • No worries about points of upfront fees.

And then there are those costs that no business owner sees coming. The sudden need to replace an important piece of equipment or the need to upgrade technology to improve efficiency and save money in the long run. Repairs, sprucing up the exterior, landscaping, even marketing and advertising can all be critical elements to your brand and your ability to growth the business. In today’s super competitive environment, this is no time to skimp, especially when applying for business funding. Working capital can be just a few clicks away.

We understand that small businesses need working capital to keep their operations humming and to pursue business opportunities as they arise. That’s why we provide working capital to businesses across a variety of sectors, in every state in the U.S.

We also understand that when business owners need financing, they need it now not weeks or months from now. So, we’ve made our application process as simple as possible, with a minimum amount of paperwork and documentation required. You won’t need to spend days and weeks retrieving tax forms and statements. Instead, we’ll talk to you about your business and your vision for the months ahead.

Once approved, you’ll have the funds in your account in as little as 24 hours. How’s that for turnaround? And when we say “working capital,” we mean it. It’s up to you how to best use the funds, for any legitimate business expense.

So what are you waiting for? Apply today for a business financing solution from LVRG. Call (855) 998-5874 or click below! We're here to help...

 

6 Ways Small Business Owners Can Finance Growth

A "small business" can be defined as a number of things. The U.S. Small Business Association defines a small business in different classes depending on the type of industry it is involved in. Basically, the business size boils down to, "the largest a business can get (both in terms of employees hired and overall turnover) while still being considered a small business concern." While confusing in and of itself, we know that small businesses make up the backbone of America's economy and have done so from the earliest days of American economic freedom. Today, the restaurants, bookstores, cafes, barber shops, beauty salons, automotive shops, grocers, florists and all other types of retail businesses make up some of the most respected businesses in any city. 

Small Businesses and Real America

Small businesses hearken back to a time when the American Dream was alive and well, fueled not by plastic products from China, but by honest, dedicated work. There are still people that conform to these ideals, and these people make up the basis of America's small businesses. Innovative ideas from a number of different catchment areas means that you can open up a business dealing with almost any type of good or service. Throughout America are new manufacturers, coffee houses, bike shops, boutiques, bars, entertainment centers...the list is endless. These businesses are what fuel America's growth and help it to withstand times of economic uncertainty. By keeping true to the values that business owners before them have espoused, these local business owners serve as the platform that supports the American economy.

Securing capital is something that comes in time with virtually every business, whether it's in the initial exhilarating stages of transforming an idea into a company or later on, once operations begin to normalize. Generating the amount of liquid cash necessary to scale appropriately, build inventory, or expand marketing efforts can be a challenge for businesses of any size, making additional cash flow a significant benefit.

Unfortunately, for many entrepreneurs, borrowing money feels like throwing in the towel and admitting defeat. In reality, securing capital can be what it takes to motivate growth and truly seize the proverbial day.

Financing a small business usually requires a lot of creative means in order to come up with a viable financing strategy. There are a number of ways that small business owners can finance his or her business. Depending on the type of business, the expected return on investment and the complications that may arise financially, finding funding can vary. The scope of the project must be presented to any potential financiers in order to give them the gist of the business plan. Small business financing can be easy, depending on where you look to get your financing from. A few of the available options for financing growth are:

  1. Small Business Loans - Probably the single most common method for funding business growth is by obtaining a small business loan. However, there are a number of different options that come with small business loans, and in order to choose the right one, you need to understand which loans work best with what type of enterprise. You should take into consideration the type of operation, size of the business in terms of staff and assets, and overall monthly or yearly return. Exploring options for loans can even clue you in to loans that are specifically designed for your type of enterprise. Loans can be either long-term or short-term, and each have their particular uses. Small business loans are usually very reliable, making them a great option for business financing available to small business owners. You can put a small business loan “to work” immediately for your business, whether it means meeting payroll for a few months, negotiating a great deal on inventory for paying in cash or hiring and training those new employees you need.
  2. Cash Flow Loans - Type of debt financing, generally for working capital, using the expected cash flows that a borrowing company generates 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. Even if your small 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 businesses throughout all industries. In a perfect world, you’d walk into your local bank and walk out with a business loan long before you wound up in a cash crunch. Well, those days are long gone! If you haven’t been in business at least two years, or lack good credit and collateral, chances are a traditional bank loan is never going to happen. In order to deal with this shortfall, a cash flow loan may be your best option.
  3. Revenue Based Loans - Instead of a business being required to pay fixed interest payments like a typical bank loan, a revenue based loan is paid with a percentage of revenues. A revenue based loan could be your businesses lifeblood and provide it with several financial benefits. When your business is growing, chances are you'll need an injection of cash to continue its growth. Bank loans are often times too restrictive and near impossible to obtain these days. In this situation, a revenue based loan may be the best solution. If you use it wisely, a revenue based loan could do wonders for your business. Without being capitalized, chances are you will wind up in a growth stalemate.
  4. Bad Credit Business Loans - Owners of small and medium-sized businesses often face a common challenge: They need capital to grow and strengthen their businesses, but bad credit may be holding them back. Forget trying to get a loan or line of credit from a “traditional” financial institution. A poor credit history will nearly always result in rejection for funding. Bad credit business loans cater to business owners that have cash flow issues or a history of liens, judgments, and bankruptcy.
  5. Merchant Cash Advance (MCA) – A merchant cash advance can provide business borrowers with an upfront fixed amount of cash in as little as 24 hours. The funding amount is based upon a percentage of the businesses credit card receivables or daily cash balances using historical credit card receipts and bank statements to determine the initial advance. The business pays back the advance, plus a percentage, often referred to as a discount factor, from a portion of their credit card receivables or cash available plus a percentage which is often referred to as a discount factor. The remittances are drawn from the business customer on a daily, or weekly basis until the obligation has been met. MCA's are good options for small business owners who may not have strong credit but have lots of credit card activity and need financing quickly.
  6. Term Loans - A term loan is a monetary loan that is repaid in regular payments over a set period of time. Term loans usually last between one and ten years, but may last as long as 30 years in some cases. A term loan usually involves an unfixed interest rate that will add additional balance to be repaid.

In some cases, access to capital is a great way to take advantage of new opportunities. In others, however, it can be a good way to pull a struggling company out of a pit of poor circumstances. Despite the potential for risk, capital can be the saving grace when trouble comes to call, providing the means to bridge the gap between failure and success. A few extra dollars today may mean an empire tomorrow, and can be the necessary protection against closing up for good.

A business loan or any of the funding options mentioned above, whether for a few thousand dollars or a few million, can make previously unavailable opportunities obtainable, providing a customized solution in a time of need and keeping the lights on even when the going gets rough. With ready access to business capital, the possibilities are literally limitless, offering the assets you need to promote a positive trajectory and inspire healthy growth.

Companies such as LVRG specialize in providing working capital to help small businesses grow, doing so quickly and efficiently. For a small business looking at growth, a company such as LVRG is definitely a good place to start. Call toll free (855) 998-5874 or click below.

 

3 Ways to Access Working Capital Fast

A "small business" can be defined as a number of things. The U.S. Small Business Association defines a small business in different classes depending on the type of industry it is involved in. Basically, the business size boils down to, "the largest a business can get (both in terms of employees hired and overall turnover) while still being considered a small business concern." While confusing in and of itself, we know that small businesses make up the backbone of America's economy and have done so from the earliest days of American economic freedom. Today, restaurants, craft breweries, barber shops, beauty salons, automotive shops, florists and all other types of retail businesses make up some of the most respected businesses in every city across the country.

Small businesses hearken back to a time when the American Dream was alive and well, fueled not by plastic products from China, but by honest, dedicated work. There are still people that conform to these ideals, and these people make up the basis of America's small businesses. Innovative ideas from a number of different catchment areas means that you can open up a business dealing with almost any type of good or service. Throughout America are new manufacturers, breweries, retail stores, coffee houses, retail boutiques and entertainment centers…just to name a few. These businesses are what fuel America's growth and help it to withstand times of economic uncertainty. By keeping true to the values that business owners before them have espoused, these local business owners serve as the platform that supports the American economy.

Nobody faces more challenges on a daily basis than business owners. In fact, for owners of small and medium sized businesses, handling many different challenges is the source of great satisfaction and some headaches, too.

But when business owners are asked to name their greatest challenge, one thing tends to top the list most often; access to capital. In other words, making sure there is enough capital flowing in to cover everything that needs to flow out.

Financing a small business usually requires a lot of creative means in order to come up with a viable financing strategy. There are a number of ways that small business owners can finance his or her business. Depending on the type of business, the expected return on investment and the complications that may arise financially, finding funding can vary. The scope of the project must be presented to any potential financiers in order to give them the gist of the business plan and use of funds.

So what options are available to a small business owner in their search for capital? In a perfect world, you’d walk into your local bank and walk out with a business loan. Well, those days are long gone! If your business isn’t profitable or over 2 years old, lack perfect credit, and aren’t willing to sign over you home as collateral, just for starters; there’s an 80% chance a bank loan is never going to happen. Thankfully, you do not have to rely on bank loans or stress about being automatically denied from your local lending institution. Alternative lenders and resources such as LVRG have many advantages over traditional bank financing, including:

  • Less Likely to be Denied
  • Niche Markets Better Understood
  • Credit Scores Not the Only Factor

Keep reading for 3 of the fastest, efficient and “obtainable” ways to access capital for your small business without the nonsense of a bank:

#1. Revenue Based Loan - 

A revenue based loan could be your businesses lifeblood and provide it with several financial benefits. When your business is growing, chances are you'll need an injection of cash to continue its growth. Bank loans are often times too restrictive and near impossible to obtain these days. In this situation, a revenue based loan may be the best solution. If you use it wisely, a revenue based loan could do wonders for your business. Without being capitalized, chances are you will wind up in a growth stalemate. Here are three ways that revenue based loan can save your business:

Helps Grow Your Business

If your business is under 2 years old and starting to scale, you obviously want to ride the wave. You cannot do this without a dependable source of capital. Bank criteria is typically a minimum of 2 years in business, strong cash flow, positive ratios and perfect credit. However, a revenue based lender will fund newer businesses, with less stringent credit requirements and use of capital restrictions. This type of loan will give you a shortcut to cash since it only requires a few months of business bank statements; whereas banks require 2 to 3 year business and personal tax returns, income statement, balance sheet, personal financial statement, debt schedule and countless other documents to complete loan package. Many times, your bank statements are enough to demonstrate to a revenue based lender that you can repay your loan. 

Get Cash Quickly

You're busy running a business, you don't have to time to compile overly detailed loan packages and chasing after loan sources. All you know is that you need cash quickly and even if you could get approved for a bank loan, is it really worth all the trouble? A revenue based loan will provide cash quickly with a very short turnaround time. If you are prepared to apply for a revenue based loan and have the appropriate supporting documents ready to go, you may be able to get funding in as little as 24 hours. Compare that to a bank loan where the loan process is on average 2 to 4 months. This is one of the main advantages of a revenue based loan. Some businesses actually consider this a lifesaver, and will go this route over a bank loan any day.

No Lingering Debt

A revenue based loan will not weigh you down with long-term debt. When you obtain a revenue based loan, you will not be looking at 5 to 10 years to repay a loan for money that you're using today. Think about it, why would you want the headache of paying off a 2015 marketing campaign all the way into 2025? Not to mention, having this type of long-term loan could hurt your chances for getting funding in the near future, which all businesses will need if they plan to scale. With a revenue based loan, you will pay it off in roughly 6-12 months, which makes more sense for short-term expenses. Additionally, lenders are usually willing to replenish the loan after roughly 50% is paid down, so you can continue getting more capital along the way. One more point to mention, going the bank route you'll also have to be aware of up-front fees, equity injections, referral fees, packaging fees, guarantee fees, and closing costs.

As you see, the preceding three steps show you how a revenue based loan could be advantageous for your business. It helps you grow your business quickly and it does not saddle you down with long-term, highly encumbering debt. It gives you the cash that you need quickly, to grow your business your way. What more could a growing business need? 

#2. Merchant Cash Advance – 

For starters, a Merchant Cash Advance (MCA) is not a loan, but rather a cash advance based upon the credit card sales of a business. A small business can apply for an MCA and have funds deposited into their account fairly quickly, often times in less than 24 hours.

Merchant Cash Advance providers evaluate risk and weigh credit criteria differently than a banker or lending institution. An MCA provider looks at the daily credit card receipts to determine if the business can pay back the funds in a timely manner. Basically, a small business “sells” a portion of future credit card sales to acquire capital immediately.

Rates on a Merchant Cash Advance can be much higher than other financing options, so it’s critical you understand the terms you’re being offered so you can make an informed decision about ROI. 

How does a Merchant Cash Advance Work?

An agreement is made between the small business owner and the MCA provider regarding the advance amount, payback amount, hold-back and term of the advance. Once an agreement is made, the advance is transferred to the business’ bank account in exchange for a future percentage of credit card receipts.

Each day, an agreed upon percentage of the daily credit card receipts are withheld to pay back the MCA. This is called a “holdback” and will continue until the advance is paid in full. Access to a business owner’s merchant account eliminates the collateral requirement required for a traditional small business loan.

Because repayment is based upon a percentage of the daily balance in the merchant account, the more credit card transactions a business does, the faster they’re able to repay the advance. And, should transactions be lower on any given day, the draw from the merchant account will also be less. This means that during times of slow business, the business’ payback is relative to their incoming cash flow.

Repayment Costs

A business that uses a Merchant Cash Advance will typically pay back 15% – 40% or more of the amount borrowed. This percentage is called the factor rate.

Note: there’s a difference between the hold-back amount that a small business pays every day (as a percentage of their sales receipts) and the repayment amount for the entire advance. There could, for instance, be a hold-back of 15%, and a repayment of 30%, so it’s important for business owners to understand this distinction.

The hold-back percentage is based on:

  • The amount of funds a business receives
  • How long it will take to pay back the money
  • How big the monthly credit card sales are

For Example: A business is advanced $10,000 and agrees to pay back $13,000. This means the payback, or factor rate, is 30%. Moving forward, the business agrees to have 15% of the business’ credit card transactions withheld by the advance company (the holdback) until the $13,000 is collected. If the business is averaging $14,500 a month in credit card sales, approximately $2,160 would be withheld each month and the advance would be paid back in roughly six months. Typical holdback rates may range from 10%-20%, though this can vary widely based upon the business and risk.

How to know if a Merchant Cash Advance is Right for Your Business?

An MCA is an option when a business needs access to capital quickly to take advantage of an opportunity to purchase inventory at a discount, a special marketing opportunity, or other short-term capital need. And, because credit requirements are less stringent, it could be an option for a business that does a lot of credit card transactions, but might have less-than-perfect credit.

#3. Cash Flow Loan

Even if your small 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 businesses throughout all industries.

For this type of business financing, lenders provide you 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 a cash flow loan, as funding usually takes place in a matter of days.

There are typically no restrictions on how you choose to use the funds from any of these funding options, as long as it’s used towards the business. With that being said, some of the more typical uses of a cash flow loan, revenue based loan or merchant cash advance include:

  • Buying equipment – Could a new computer, desk, telephone, cash register or software come in handy? Money to pay for the purchase of necessary business equipment could help boost your profits. And if this cash isn’t readily available in your account, a cash flow loan, revenue based loan or MCA can provide you with these funds.
  • Paying employees – Instead of running your business like a one-man show, a few extra hands could really help. Spending borrowed money on employee’s salaries can be the answer rather than disrupting your cash flow to cover this expense.
  • Purchasing inventory – One of the most common uses for fast working capital is buying inventory. It takes products in stock to make business profitable, so it only makes sense to invest in enough inventory to make sure you always have enough to sell to clients.
  • Expanding the business – If your business is experiencing some success, you might want to start thinking about taking things to the next level. A lump sum of cash might be just what you need to get business booming.

Benefits of a cash flow loan, revenue based loan or merchant cash advance

In addition to the much easier method of obtaining working capital from a resource like LVRG than from a bank, a cash flow loan, revenue based loan and MCA has a lot of incentives when it comes to small business financing:

  • Much quicker approval times from LVRG than a bank. This translates to faster cash-in-hand, allowing you to take advantage of current market prices.
  • Whereas business loans from a bank require you to have collateral in order to gain favorable consideration, LVRG requires you to be subject to a limited amount of conditions.
  • A cash advance or revenue based loan is also much more beneficial to the cash flow of a company since it does not require any monthly payments or upfront fees that are characteristic of loans.
  • There is no limitation on how the funds acquired from a cash flow loan, MCA, or revenue based loan can be used. Funds that are loaned through a financial institution must be used for the stated purpose by the business. As a result, money from a business loan has a very narrow scope of action as compared to money that comes from a cash advance or fast working capital loan.
  • No UCC-1 is required for either a revenue based loan, cash flow loan or UCC-1

So there you have it, 3 of the fastest, most efficient and “obtainable” ways to access capital for your small business. Cash Flow Loans, Revenue Based Loans and Merchant Cash Advances from LVRG have helped thousands of businesses just like yours not only turn the corner, but pull ahead in the race. LVRG is one of the fastest growing companies in the industry, our expert funding advisors are ready to learn about your small business financing needs, while doing so with speed and transparency. Call us today toll free for more information (855) 998-5874 or click the banner below to get started!