Starting, maintaining, and growing a business is a courageous endeavor, requiring a passionate belief in one’s self and abilities; and in many cases, it also requires ongoing access to working capital. While many larger companies and corporations easily obtain premium financing options, small business owners and entrepreneurs also deserve access to the best lending products available today.
Working capital advances – also known by various other names such as ACH Business Loans or merchant cash advances – are an extremely fast and efficient form of funding for many small to medium-sized businesses. They differ from more traditional loan products in three distinct ways.
Speed and Ease
All that’s needed to secure a pre-approval for a working capital advance is a one-page application, along with the most recent three months of the business bank account statements. Approval decisions are typically generated within 24 hours (often in just an hour or two), and if accepted by the business owner, the advance can be funded in as little as one to two business days. Try asking a bank to move that fast on a business loan!
Working capital advances are structured very differently than the average bank loan. They are shorter term due to the unsecured nature of the funding, and usually range anywhere from 6 – 18 months in duration. Due to the shorter term, and the lack of collateral or security required, these advances are paid back much more frequently. Payments are remitted automatically (via ACH, or sometimes through a merchant’s credit card processor) either on daily business day, or weekly basis. Up to this point, these were the only two payment frequency options.
However, with the entrance of new lenders into the space, comes a recent product innovation. For those that qualify, monthly payment options are now available. This combines the speed and ease of funding of a working capital advance, with the more traditional monthly payment structure. Another benefit of a once-monthly payment versus daily or weekly payments is how it simplifies the accounting; it’s simply easier to manage one payment a month!
It is important to know all your options when considering obtaining funding for your small business. From type of loan, be it traditional or alternative, to daily, weekly, and monthly payment options, the lending products available to small and medium-sized businesses has expanded exponentially over the past few years.