Coming back from the business restrictions and shutdowns that resulted from the COVID-19 pandemic can be tough. For many small business owners, just keeping their business afloat has put a serious dent in their working capital. Those who successfully continued to do business had to invest most, if not all of their capital, in equipment and training to adapt to new methods. Others just struggled to minimize and meet their overhead. Their goal was to survive until they could safely get back to doing business as usual. With restrictions being eased or lifted in many states, business owners looking to meet consumer demand for their products and services are going to need merchant funding.
PPP (Paycheck Protection Loans) didn’t reach all small businesses and, with banks already approving fewer small business loans, business owners are left to wonder where that funding is going to come from. Although their ability to provide cash is somewhat limited as well by the current economic environment, alternative finance companies offering merchant funding options may be the perfect solution for some small businesses.
Despite PPP and all the other federally funded business loans that have been offered, not every business qualifies. On top of that, if you’re trying to get a traditional business loan from your bank, it will seem like the aftermath of the 2008 financial crisis all over again. Fewer small business loans are being approved and those that are approved aren’t being funded fast enough. So how is alternative merchant funding different?
First of all, it’s not a loan. Alternative merchant funding options such as the merchant cash advance are an advance on future sales or in the case of invoice factoring, an advance on money that is already owed to you. These types of funding options allow you to get the capital you need without taking on additional debt.
It is not uncommon for some businesses to have less-than-perfect credit during an economic downturn. That can be a red flag when applying for a bank loan. While alternative funding providers may consider your credit score, they also consider other criteria equally as important. For example, with a merchant cash advance, past sales revenue is an important factor since repayment will be generated by future sales. With invoice factoring, the credit score of the customers whose invoices you are factoring are considered, not yours.
Another important benefit of alternative merchant funding is it is faster than receiving a traditional bank loan. Alternative funding providers require less time and paperwork because they leverage the power of fintech to gather and evaluate your financial information and make a determination. The whole process takes much less time and, once your application has been approved, you can typically receive funding in a few days. In business, especially now, time is money.
Best of all, there are no restrictions on how you invest the money in your business. With a bank loan, there are often covenants that dictate how the funds can be spent. With merchant funding, you can use the funds however you see fit.
If your business needs an immediate influx of capital to keep your business moving forward, alternative merchant funding options can be a great solution. At CapFlow Funding Group, our team of professionals will evaluate your business’s unique situation and help you determine which funding option would best suit the company’s needs. We service many different industries with a variety of different funding needs. In addition to merchant cash advances and invoice factoring, we work with trusted partners to provide additional merchant funding options. Contact us today!
For some small business owners, maintaining a steady cash flow to keep daily operations running smoothly and having enough capital to promote growth is a constant struggle. This is especially true for businesses that have their accounts receivable on a 30, 60, or 90-day payment agreement. That outstanding revenue can sometimes be the difference between moving your business forward and standing still. Factoring capital is a way to eliminate the wait and get that revenue when you need it most.
The process of factoring capital is referred to as invoice factoring, account receivable factoring, or factoring. It is an alternative financing option that allows business owners to turn their accounts receivable into cash without waiting to receive payment from their customers. Selling the invoices of customers in good standing to a factoring company can provide businesses with cash when they need it most. Factoring capital offers other benefits as well.
Inconsistent cash flow and taking on too much debt are among the top reasons businesses fail. Invoice factoring allows you to avoid both. As opposed to traditional financing, factoring capital allows you to get cash quickly without taking on any additional debt. You are simply getting an advance on money that’s already owed to you. That boost to your cash flow can help you avoid the possibility of failure and keep your business moving forward.
Whether it’s opening an additional location, expanding your product or service offering, or venturing into the online marketplace, business growth is the goal of every small business owner. It takes time, hard work, and of course, cash. Factoring capital gives you the ability to buy raw materials, take on larger orders, and grow your business. Never turn away a big order or miss out on a golden opportunity again.
Once you’ve sold invoices to the factoring company, you’re no longer responsible for collecting them. The invoices are then owed to the factoring company. The time and payroll dollars saved by not having to follow up on invoices, collecting outstanding amounts, and the bookkeeping involved can be invested in growing your business instead. The factoring company will handle collections and provide you with detailed reports of every transaction.
It’s not uncommon for small business owners to have a few black marks on their credit reports. While this could easily cause you to be denied for traditional financing, it’s not an issue when factoring capital. The factoring company is concerned with your customer’s creditworthiness, as those invoices will be owed to them. The factoring company will check the credit of the customers whose invoices you submit for factoring. However, it is still wise to only submit invoices for clients in good standing with a solid payment history.
A traditional business loan often comes with a loan covenant attached which dictates how the money can be used. This isn’t the case when factoring capital. With invoice factoring, the cash is yours to invest in whatever area of the business you chose.
Whether it’s an unexpected business opportunity or everyday investment in business growth, it’s important to have the capital available to address it in a timely manner. While waiting for invoices to be paid, a business owner can miss out on a chance to move their business forward and push ahead of the competition. Invoice factoring can help you get the capital you need when you need it.
CapFlow Funding Group specializes in invoice factoring and works with a variety of businesses, large and small to fuel business growth. Our invoice factoring programs can benefit businesses in need of short-term working capital. We also partner with other lenders to provide funds for businesses that require financial services other than ours. Contact us today and find out how we can help you grow your business.
