The 2008 financial crisis caused banks to tighten restrictions on small business loans. They focused on larger loans as they are more profitable. With the economic downturn that resulted from the COVID pandemic, traditional business financing is harder to secure than ever. Grant programs such as the PPP (Payroll Protection Program) and EIDL(Economic Injury Disaster Loan) have dried up. Business owners that are still struggling to recover are looking for alternative funding options to keep their businesses afloat. However, this is not the only reason business financing alternatives are becoming more popular with business owners. They offer benefits beyond funding.
One of the biggest frustrations of traditional business financing is how long it takes to get a loan. Certain steps must be taken before the bank will even accept the application. Then once it is submitted, approval can take anywhere from a couple of days to months. That can be too long to wait for businesses that need funding fast.
Business finance alternatives typically require less information than banks, making the application and approval processes much quicker. Businesses can often have the funds they need within days, allowing them to spend less time searching for financing and more time on taking care of business.
Even if you have all the proper documentation prepared when applying for a traditional loan, certain industries have been “black listed” by banks insured by the FDIC (Federal Deposit Insurance Corporation). The reason is that those businesses are considered high risk and the FDIC won’t insure banks that issue high-risk loans.
Businesses that work with alternative lenders often find more success when looking for business financing. Business owners should do their research and weigh their options. If your business is typically turned away by banks, don’t waste valuable time jumping through their hoops. Instead, consider the business finance alternatives.
Unless you’ve been dealing with the same bank forever, most of them will just take your mounds of paperwork and follow a standard checklist to see if you qualify for financing. Alternative lenders focus on understanding your business and building a relationship. This may not seem all that important at first but think about it.
Many business finance alternatives provide short-term financing, something many businesses will need more than once. Establishing a relationship with an alternative lender will make the process even easier the next time you apply. With a bank loan, you have to go through the entire application process every time, and the chances of being approved are slim. Alternative lenders work hard to get your application approved for funding.
If approved for a traditional bank loan, beware. They often come with strings attached called loan covenants. These covenants place restrictions on how you can spend the funds you received. Do you want someone else telling you how to invest in your business?
With most business finance alternatives, once you have been approved and received funding, you can spend those funds how you see fit. Some options, like the merchant cash advance, include repayment amounts that fluctuate with your cash flow.
If you need immediate funding or have been denied a traditional loan, alternative financing options could be the answer to your problem. At CapFlow Funding Group, we value each of our clients and work hard to provide them with the perfect funding solution for their business. Our team works with various industries and specializes in invoice factoring and merchant cash advances. If neither of these fits your needs, we will work with trusted partners to get the funding you need. Contact us today. We’re looking forward to getting to know you.
Traditional business loans are becoming increasingly difficult to obtain. This has caused more business owners to consider alternative financing options to get funding for business growth. With multiple funding options to choose from, how do you know which would be best for your business? Two popular options for business funding are the ACH loan and the merchant cash advance. However, just because they are a popular choice, that doesn’t necessarily mean either is the right choice for your business. To make a wise decision when choosing between these or any other alternative funding options, it’s important to understand how they differ. Let’s take a more in-depth look at each of these options to make the choice easier.
Although it is called a loan, an ACH loan is actually an advance on future revenue. ACH (Automated Clearing House) refers to the method of repayment. With an ACH loan, the business receiving funding will repay the lender via direct withdrawals from their business bank account.
These withdrawals are a set amount taken at specific intervals and will be monthly, weekly, or daily depending on the terms offered by the lender. Regardless of any fluctuations in your incoming revenue during the repayment period, your payments will remain the same. If your revenues should decrease during the repayment period, you could face a serious disruption in your cash flow.
ACH loans are designed for most types of business and can be a good option for short-term funding. When evaluating your application for ACH funding, lenders will be more interested in the average daily balance of your business checking account rather than your credit score. Loan amounts are generally smaller than some other funding options and the APR can be significantly higher. There are often origination fees, prepayment penalties, and other costs.
There are many similarities between the ACH loans and a merchant cash advance, which can lead to confusion. The merchant cash advance is also not considered a loan and payments are made automatically. It is an advance on future credit and debit card revenues and is designed specifically for merchants who receive most of their revenue via debit and credit card sales.
Repayment is based on and deducted from these sales. This is where the major difference between the merchant cash advance and an ACH loan is revealed. While ACH payments are static, merchant cash advance payments fluctuate with the rise and fall of debit and credit card sales. This built-in flexibility can help to prevent any cash flow disruptions during the repayment period that could impact daily operations. The repayment schedule can be monthly, weekly, or daily depending on the terms offered by the merchant cash advance provider. The APR for the merchant cash advance will be higher than that of traditional loans. There is no opportunity to pay down the principle in order to decrease the interest due. The full interest amount must be paid along with the entire advance amount before the merchant cash advance is satisfied.
As you can see, like most funding options, there are pros and cons to both ACH loans and merchant cash advances. However, with the low approval rate of traditional business loans and the long line of business hoping to receive SBA loan approval, alternative funding options can be a great source of timely short-term funding to address your current business needs.
CapFlow Funding Group works with a variety of different industries to provide the funding they need to keep their businesses moving forward. Although we specialize in invoice factoring, we work with trusted partners to provide merchant cash advances as well as other options. We can also help you understand the differences between the options available. Our goal is to provide you with the best possible funding solution for your business. Contact us today to see how we can help you get the funding you need.
The COVID pandemic has wreaked havoc on the small business community. Unfortunately, the Payroll Protection Program (PPP) and other federally-funded programs fell short for many small business owners. According to a May 2020 article in the Washington Post, more than 100,000 small businesses have closed due to the economic downturn that resulted from the pandemic and that number continues to increase. However, some small businesses are exploring alternative funding options to try and overcome this crisis. For many, a merchant cash advance could be the lifesaver they’re looking for.
It isn’t a matter of choosing one over the other. By all means, as a small business owner, if you qualify for a PPP loan, you should take advantage of it. As long as you follow the restrictions that accompany this type of funding, the loan is forgiven. This is where a cash flow gap occurs for some small business owners. The PPP requires that 60% of the funding be spent on payroll in order for the loan to be forgiven. For businesses that only have a few, that may not be possible. Even if it is, the remaining 40% may not be enough to cover other overhead expenses – never mind financing what you need for a successful recovery.
Obtaining a traditional business loan from your bank became difficult after the financial crisis of 2008. Although approval rates were beginning to improve, the COVID pandemic brought that to a screeching halt. Even if your chances of getting a traditional loan are better than most, receiving that funding can take a long time and involve a lot of paperwork. If it’s time to sink or swim for your small business, do you really have time to wait? Merchant cash advance funding can have you approved in hours and funded in days.
In addition to getting the funding your small business needs to work toward recovery quickly, there are a few other benefits of merchant cash advance financing.
The last thing a small business owner wants to do in the current economic climate is to add long-term debt to their balance sheet. A merchant cash advance is not a loan. It is an advance on your future debit and credit card sales. Repayment is automatically deducted from those sales at an agreed-upon percentage. This means your payments will increase or decrease in proportion to your sales. With the money to finance any operational adjustments your business needs to succeed in the new normal, your sales will rise and your merchant cash advance will be paid off in no time.
That’s not a problem. Merchant cash advance approval is based on more than just your credit score. Their approval rate is generally higher than that of traditional financing. Your credit rating can impact the amount of your cash advance, however, it isn’t the primary factor in granting an approval. The revenue generated by credit and debit card sales is instrumental in receiving approval as well as the average daily balance of your checking account, any overdraft fees, and negative balances.
Unlike the PPP loans, you can use merchant cash advance funding to cover any business expenses necessary. Whether you need to purchase new equipment, develop new operating procedures, or hire an agency to help you compete in the online marketplace, a merchant cash advance can make that happen and have your small business on the road to recovery in no time.
If your business needs an immediate influx of capital to keep your business moving forward, a merchant cash advance 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!
There’s no getting around it. The COVID pandemic has forever changed the way we do business. Even when all the vaccines have been administered, restrictions have been lifted and the threat of the disease has been put to rest, what we consider normal will be different. This especially true for retailers, restaurants, companies that rely on technology, and more. While many small businesses have been focused on surviving the economic impact of the pandemic, now is the time to plan for post-COVID business recovery. This will involve taking the stopgap measures business owners implemented on the fly and determine how to integrate them to revise their current business model. They will need to develop a new strategy for conducting and marketing their business. Here are some of the common business recovery challenges business owners are dealing with.
You may have only dabbled in eCommerce before the pandemic or maybe you were strictly a brick and mortar business. Moving forward, eCommerce sales could become a major source of your revenue. Everything from luxuries to essentials can be found online. What began as a way for consumers to safely purchase goods during the height of the pandemic, has become a matter of convenience for many.
With online shopping, consumers aren’t spending time driving from store to store to get the items they need. Many businesses that have physical locations make it possible to see if the item is available at a nearby store, eliminating wasted trips if you need it in a hurry. Entering the eCommerce marketplace provides consumers with access to your business 24/7 from anywhere. The importance of eCommerce should not be underestimated when developing your business recovery strategy.
Digital and social media marketing are crucial for post-COVID business recovery even if your business only has a physical location. A website and strong online presence are no longer optional if you want consumers to find you – they’re a necessity. Showing up on page one of a Google search or ads and positive reviews on Facebook can be the difference between standing out from your competitors or getting lost in the crowd.
However, getting to the first page of a Google search won’t happen just because you have a website or eCommerce store. Much like in the advertising world of Mad Men, digital and social media marketing takes research, analysis, and a bit of creative genius to develop a strategy to reach the consumers interested in your products or services. Unless a business owner has a lot of extra time to tackle their own marketing efforts, they may need to hire a professional agency to handle it for them.
When the pandemic first hit, employees that could work from home were allowed to without much thought given to supervision or the security of the intellectual property. It wasn’t long before both employers and their employees began to realize the benefits of a remote workforce. Businesses were able to reduce or eliminate the overhead of a physical office space. Employees spent less time commuting, discovered a better work/life balance and the majority became more productive.
However, as the remote workforce becomes more the norm, supervision, communication, and security all become issues that need to be addressed. Remote productivity, online conferencing, and intellectual property security all require specific technology. Understanding what is needed and implementing the right solution may be outside a business owner’s wheelhouse. Unless you have some IT experience, hiring a business It specialist to consult with and implement the proper solutions will become necessary to strengthen and secure your remote workforce.
When it comes to post-COVID business recovery, streamlining curbside pickup and delivery is essential for many retailers and restaurants. While some have successfully implemented these practices, many businesses still have work to do. The convenience factor of these services is going to continue to be important to consumers, even after COVID.
Curbside pickup and delivery will require a shift in the workforce that includes more in-store shoppers filling orders, staff dedicated to facilitating these services as well as the appropriate number of delivery vehicles. Delivery also opens up a business to additional liability issues requiring increased insurance expenses.
In many cases, developing an effective business recovery strategy will take more capital than businesses can afford without negatively impacting their cash flow. Traditional bank loans are going to be extremely difficult to secure. So, how do you cover the cost of a successful business recovery strategy?
CapFlow Funding Group may be able to provide the perfect solution. We offer merchant cash advances and invoice factoring and are dedicated to providing the short-term working capital you need to remain competitive in the post-COVID marketplace.
Our merchant cash advances can be a great option for retailers ready to dive into the online marketplace and for B2B businesses invoice factoring can be the perfect solution. We also work with trusted partners to provide other alternative financing options that may be better suited to our clients’ business needs. We service many different industries with a variety of funding needs. Our goal is to find the best funding solution for your business. Contact us today and find out how a merchant cash advance or invoice factoring can fuel your business recovery strategy.
Some retail merchants couldn’t wait to enter the eCommerce marketplace. Others were leary and refrained from diving in, despite all the predictions of eCommerce growth. While those predictions were bound to come true eventually, the pandemic of 2020 has seen those predictions come to fruition. Whether you’ve just been dabbling in online retail or are finally ready to transition to the eCommerce marketplace, the time is now. Still not convinced? Once you check out recent statistics and consider the benefits, you’ll probably change your mind.
According to Statista, global eCommerce sales are expected to increase 246.15% by 2021. That’s up from 1.3 trillion in 2014 to 4.5 trillion in 2021. Ecommerce sales soared when the pandemic began, increasing by 44.5 % compared to second-quarter sales in 2019. While they have declined somewhat with the loosening of quarantine restrictions, they are still expected to show a 20% increase by the year’s end.
2020 also saw the decline of many brick and mortar stores. While the pandemic played a part in this, most business analysts claim it simply accelerated what was going to happen anyway. Many of the large chain stores were already opting to reduce the number of physical locations they have in favor of investing in their eCommerce growth.
A 2017 report from Statista showed the breakdown of online shoppers by generation.
These numbers reflect online shopping habits before the pandemic. No doubt they’ve increased since then. Now that we know who is shopping online, let’s look at some of the reasons why.
It is important to note that in addition to making online purchases, online browsing and research are often a prerequisite to making an in-store purchase. This eliminates the time spent going from store to store to do comparison shopping. It also allows shoppers to read reviews about the product they’re considering and those reviews often influence their purchases. All of this makes building a strong online presence and investing in eCommerce growth a wise business decision.
To successfully enter the eCommerce marketplace involves developing a strategy, building or upgrading your website, and promoting your business on social media. It is a big undertaking in both time and money but one that will pay off if done properly. There are various factors to consider such as identifying your online audience. With eCommerce growth, you will reach a much broader audience whose needs may be different than those who shop your brick and mortar stores. Your competition will also be larger so it’s important to take steps to make your business stand out in the crowd. Unless you already have digital marketing experience, it is often best to hire a professional agency to kickstart your eCommerce growth.
Ready to invest in eCommerce growth but concerned about the upfront cost? At CapFlow Funding Group, we understand that this kind of investment can be difficult to make without depleting your existing working capital. We offer merchant cash advances and invoice factoring and are dedicated to providing the short-term working capital you need to promote eCommerce growth.and remain competitive.
Our merchant cash advances can be a great option for retailers ready to dive into the online marketplace and for B2B businesses invoice factoring can be the perfect solution. We also work with trusted partners to provide other alternative financing options that may be better suited to our clients’ business needs. We service many different industries with a variety of funding needs. Our goal is to find the best funding solution for your business. Contact us today and find out how a merchant cash advance or invoice factoring can fuel your eCommerce growth.
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!
There’s no denying that the recent pandemic has had a significant impact on many businesses. Retail businesses and restaurants were hit particularly hard. Even some of the major players took a hit. Nordstroms, Bath and Body Works, Victoria’s Secret and Starbucks have announced that multiple locations will be permanently closing. If these large companies are struggling to stay afloat, it is, of course, even harder for smaller business retailers and restaurants to ride it out and successfully reopen. After the major financial loss they suffered, merchant funding solutions are at the top of most of their reopening checklist.
However, to ensure reopening success, small businesses are going to need more than just fast working capital. They are going to have to take a long, hard look at the damage as well as their existing strategy. Retailers and restaurant owners have to position their businesses to adapt to the new normal for their industries if they plan to emerge from this victorious.
It’s important to know where you stand financially when reopening your business. Now is the perfect time to update your financials. By comparing them to last year, you will be able to accurately assess your losses. Many small retailers and restaurant owners will have either depleted their reserve of working capital or did not have enough in reserve to begin with. This means they will need to explore various merchant funding solutions. In addition to determining which is the best for your specific situation, you will also need to determine what you need to do to recoup those losses.
What worked before the pandemic, may not work after it’s been contained. Even as restrictions are being lifted, many people are wary of putting themselves out in the general public. Retailers and restaurant owners will need to rethink how they do business and which areas of their business they need to make a priority going forward.
Whether you were closed or conducting business on a significantly reduced scale, this resulted not only in lost revenue but also in lost customers. Many retail customers turned to Amazon to get what they needed. Restaurants that remained open found themselves competing with local pizzerias and fast food joints specializing in taking out and delivery. You may have to rethink how you do business to lure customers back. You may need to increase or retarget your marketing efforts and prioritize different aspects of your business. You may also need to hire new employees or retrain existing ones to effectively implement your new business plan.
Experts predict another wave of COVID-19 to hit in the fall. Even if it doesn’t happen, some other future crises could potentially derail your business. If you were prepared this time, good for you. If you weren’t, it’s time to create a contingency plan so you aren’t completely blindsided the next time. In addition to diversifying your business plan, look for ways to build up your reserve of working capital. Reduce nonessential spending or implement more efficient operating procedures. You may also want to focus on paying down debt, leaving you with fewer financial obligations should another crisis occur.
If you’re in need of a little help getting your business back on its feet, CapFlow Funding Group may be able to help. We specialize in invoice factoring and merchant cash advances (MCA). For retailers and restaurants, an MCA can be one of the best merchant funding solutions. It can provide you with the fast working capital and revenue-based repayment, without the need for a perfect credit score or taking on additional debt. We are dedicated to providing the short-term working capital you need to rebuild your business and will work with you to find the best funding option.
CapFlow also works with trusted partners to provide other merchant funding solutions that may be better suited to our clients’ business needs. We service many different industries with a variety of funding needs. Contact us today and find out how invoice factoring can help grow your small business.
