The Basics about Small Business Capital Loans

A lot of small business owners today want to reinvest in their company, whether it’s expanding to a new location, rolling out a new product or service, or upgrading their equipment. Many of them want to do more than what their cash on hand will allow them to do, which is why lenders offer fast working capital loans to help business owners take their operation to the next level.

Would you like to expand your advertising presence, take care of some outstanding debts from your first year of operation or upgrade the brick-and-mortar presence of your business? Fast start up business loans like the ones that BBC represents can make the difference between progress and stagnation…between thriving and just standing still. And as we all know, if you’re not making progress, you’re losing ground, because you know that your best competition is moving forward even as we speak.

BBC works with a number of lenders that can provide startup capital loans in a matter of a few business days. If the banks have been sending you away, then you should know that we have connections with lenders who work with small business owners, particularly those who have been working with a startup for 6 to 12 months, and give them the boost of cash they need to turn the next corner.

Business startup capital loans

A lot of our customers ask us why they can’t get business startup capital loans from banks. After all, they are hard-working entrepreneurs who will make the most out of the credit that they receive, but time after time, the banks just send them away, asking them to come back with better numbers in terms of revenue.

But isn’t the whole point of this type of financing to give small businesses that extra infusion of liquidity that they need to build that revenue? That’s where they come in. It’s true that in the aftermath of the financial collapse of 2008, banks had to become a lot more conservative with their lending in order to meet government requirements. However, some of them have gone overboard in that area, turning down people who have the means to pay their loan back, simply because a set of numbers does not come out of the computers in just the right way.

We represent lenders that can fund well into six figures in a short amount of time. Your business and personal FICO scores do not have to come into play as much as they do for traditional lenders –a lthough they are still part of your application.. We have one common application that all of our lenders use, so you don’t have to fill out a separate set of paperwork for each potential funding source. We also have lenders that offer a variety of different repayment options, depending on where your business is at the present time financially.

Some of our lenders offer traditional installment loans. That means you receive approval up to a certain amount, and then you get a check. You start making payments on the principal with interest each month, just like with a car note or a mortgage.

For many of our customers, though, that sort of credit doesn’t work. They don’t have the liquidity on hand to take on another monthly obligation at a fixed amount. However, they do have business levels that are growing to the point where they can handle an additional expense – they just need some extra flexibility.

This is where the idea of the small business cash advance comes in. You have started to build your business, but the growth is still cyclical. You might have two huge weeks, and then three slow ones, followed by one that brings in more than the whole first month when you were in business. Because it still fluctuates, though, you don’t really want to take on a fixed monthly payment.

How to get a merchant cash advance

Here’s how the cash advances that BBC represents operate. We’ll take a look at your last three months of bank statements and your last three to six months of credit and debit card receipts. On the basis of that information, our lenders will decide how much to advance you.

Once you agree to the terms, you get the advance, and then you start paying back the loan – but the flexibility is what makes it worthwhile. Instead of a fixed monthly payment (or even a fixed weekly payment, as some lenders offer) our working capital cash advance clients offer a payment schedule that varies as your income does.

Here’s how it works – at the end of every business day, a set percentage of your business receipts through credit and debit cards go to your lender instead of to you. If you have a huge day, then you make a bigger payment to the lender. If things are slow, then you pay less. If no one comes in (or no one pays in credit or debit cards) then you don’t pay a dime.

Here’s another perk – you don’t have any personal liability for the money. So let’s say that you hit the extreme worst case scenario: your company tanks and you have to shut things down. The lender for a working capital cash advance can’t come after you personally; the note is tied to the credit and debit card receipts that your business takes in.

Obviously, we don’t want that to happen. Our lenders carefully calculate your approval amount so that it gives you enough money to spur significant growth without giving you additional stress. We recommend that our customers negotiate the lowest payment percentage (meaning the amount that comes out of your receipts every day) possible, giving you the most flexibility.

Is there a downside to this? Well, you do have to pay the money back, but you would have to do that anyway. If your business really takes off, you pay the advance off sooner. Paying it back more quickly doesn’t help you in terms of reducing the amount that you pay back, though. When you take out the advance, you agree to the entire cost of the loan, which is determined by the factor rate, which usually sits between 1.1 and 1.4. This tells you how much you’ll have to pay back. If you take out $100,000 with a factor rate of 1.3, you would pay back $100,000 x 1.3, or $130,000. Whether it takes you six months or three years, the amount that you pay back is the same. Most lenders, though, try to figure out what you can pay back in nine months to a year and make their lending decisions accordingly.

If you think that this sort of startup working capital advance might be right for you and your business, we at BBC would love to talk to you. Our goal is to help small business owners find the financing that they need – and deserve – in a lending environment that leaves far too many entrepreneurs high and dry when it comes to finding the capital they need to take their businesses to the next level.

Please reach out to one of our small business lending experts so that we can talk about your business – where it is now and where you want it to be. We will match your profile with some of the lenders that BBC represents and make some recommendations about your individual situation. We look forward to working with you!

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