Expanding Your Business through Merchant Cash Advance Benefits

Businesses need a robust cash flow to sustain their operations and generate profits. At times they may need to borrow funds to acquire resources, maintain operations, or grow. Unfortunately, various factors can adversely affect a business's ability to borrow from traditional financial institutions. These factors include having a poor credit history or insufficient credit history, missed or late payments, high debt-to-service ratio, bankruptcy, records of default, or simply being a relatively new business.However, there are many funding solutions available for Small Businesses that don’t fit the bank or credit Union model.These options are:

1. Merchant Cash Advance

A merchant cash advance is a financing option that offers businesses a lump sum cash payment in exchange for a percentage of their future credit card or debit card sales. This type of financing is best suited for businesses that require quick cash and have a high volume of credit or debit card sales.The primary advantage of a merchant cash advance is the speed and ease of accessing immediate cash funding. The process typically takes only a few days, and the funds become available within a short period.Business owners should take in account that although merchant cash advance is a convenient cash flow instrument and allows you to get funding within a few days, it may come with higher fees and interest rates due to their quick access to cash.

2. Invoice Factoring or Cheque Factoring

Invoice factoring, also known as cheque factoring, is a financing option that enables businesses to utilize their outstanding invoices in exchange for a cash advance that is immediately available. The lender collects payment from the business's customers and pays the business the remaining balance minus the financing cost. This type of financing is ideal for businesses with bad credit history since their ability to borrow is based on the creditworthiness of their invoice customers rather than the borrower. Businesses with long-term contracts, high-value invoices, or those needing cash to immediately purchase materials to fulfill high-value invoices should consider this type of bridge financing.Manufacturing, construction, transportation, and wholesale/distribution are businesses that can benefit from this type of financing to meet their immediate cash flow needs.The main advantage of invoice factoring is that the lender typically assumes responsibility for collecting payment from the invoice customers or payers. This can free up valuable time and resources for the business to focus on other aspects of their operations. Furthermore, businesses with long payment cycles, delayed payments, or long-term contracts that involve milestone payments can obtain the necessary cash to expand or continue operating their businesses immediately.Similarly to merchant cash advance companies, factoring lenders may charge a high fee for assuming the risk of collecting on the invoice and the time gap until the invoice is due for payment.

3. B-Lender Loans

B-Lender loans are non-traditional financing options provided by private equity firms or online lenders. These lenders are often willing to lend to businesses with bad credit or little credit history for various purposes. They understand the complexity and cash flow requirements of small businesses and work with them regularly. This type of loan comes in various sizes and forms, depending on the business needs and the business entity's qualifications and lending risks.B-Lender loans are a great financing option for start-ups, small businesses, seasonal revenue businesses, or those in urgent need of short-term financing. Traditional lenders typically require creditworthiness, good credit history, and collateral, but B-Lenders often have significantly more flexibility. These lenders are specialized in dealing with the complexity of newer and smaller businesses and can provide loans with less stringent due diligence processes and quicker turnaround times to meet business needs.However, it is highly advisable for borrowers to understand the terms of the loan and carefully review the terms and conditions before accepting them. B-Lender loans are less standardized and customizable and can vary significantly in terms such as repayment, interest, default events, settlement, and legal jurisdiction. Businesses should also be aware that B-Lender loans may come with higher fees and interest rates due to their higher risk tolerance.B-Lender loans can be a great option for businesses that are just starting or facing challenges with traditional lenders. These loans can provide flexibility, speed, and customized financing solutions to meet their specific needs. However, careful consideration of the terms and conditions and full understanding of the associated costs are crucial before committing to this type of financing.

4. Instant Payday Loans

Instant payday loans are short-term loans that can be used to cover unexpected expenses or emergencies. They are easy to obtain and are often offered by online lenders. Borrowers may receive access to immediate relief cash within hours, thanks to the quick and standardized approval process of the lenders that provide these loans.Instant payday loans are suitable for individuals with emergency cash needs or who need access to immediate cash to cover unexpected expenses. Some typical uses for instant payday loans include medical bills, car repair bills, and home repair bills. These loans can offer immediate cash relief to ensure a person has the cash to cover daily living needs to continue working and earning money.Payday loans can be useful for individuals who have low credit scores or limited credit history and may not qualify for traditional loans.Borrowers should know that instant payday loans typically have high interest rates and fees for their ease of access and quick approval process. The repayment period is often within two to four weeks. As these loans can be accessed quickly and easily with minimal documentation requirements, these could be beneficial for individuals who need immediate cash and don't mind the associated fees.In summary, there are various types of non-traditional lending and financial services available to businesses and consumers in Canada. These services can provide cash relief for a variety of situations, depending on the borrower's needs and qualifications.Merchant cash loans are suitable for businesses with high credit or debit card transaction volume and immediate cash needs. Invoice or cheque factoring can benefit businesses with valuable invoices with longer repayment terms. B-Lender loans are a great option for start-ups or small businesses with an immediate cash need to expand or maintain operations. Instant payday loans can provide relief for individuals with unexpected or emergency cash needs.Overall, non-traditional lending and financial services can provide valuable solutions for businesses and consumers with unique financial needs. It is also vital to approach them with caution and careful consideration of the associated costs and repayment terms. With the right lender and loan terms, these financial services can help businesses and individuals overcome cash flow challenges and achieve their financial goals.

Funding is the only way to turn startups into successful businesses. Getting funding is easier said than done. However, it’s a fact that you need sufficient money to get your business to the next level. Investment and funding are required to raise the necessary capital to either initiate or run a business. The working capital is the option on which companies rely for the smooth running of affairs and uncalled crisis. Funding coupled with motivation, determination, and brilliant ideas can kick start the business off the ground. Lack of proper and timely funding can collapse business strategies and decrease capital, which ultimately causes failure. If you’re wondering why businesses consider looking for funding, you’re at the right place. Following are some reasons due to which funding becomes essential for companies.

Development

Growth and development are the foremost motives of a business before seeking funding. Acquiring new clients, local businesses, and marketing to improve outreach are all the prospects of growth. Establishing additional branches and expanding services is also the result of the funding sought for the sake of growth.

Working Capital

Another significant reason for obtaining fundings is working capital. Working capital is the monetary assets that provide the companies with sustainability. Managing regular affairs and retaining the quality of services are done through the working capital. It can be used to stock the inventory and carry out successful purchases by efficient expenditure. Insufficient working capital can cause detrimental effects to the business in the longer run. The current affairs and prospects depend on the working capital, which is provided through funding.

Acquiring Assets

To hold a firm position in the market and among the competitors, businesses need to purchase assets. Eliminating the competitors in the market is the feature of having more assets. Businesses can emerge out as a winner when they become the sole provider of a service. Companies can either buy shares or completely acquire other businesses. Assets not only strengthen the company but also enhance its market value.

Initiating New Ventures

Companies use funding to plant new ventures. These endeavours can promote the business and increase its progress. To conduct these strategic ventures companies, need ambition and funding. They can articulate ambition in their employees, but for funding, they need help.

Boosting Startups

Funding is vital to support startups in the fierce market. Startups usually have scant resources that can soon become insufficient, leading to a business catastrophe. Startups need financial help and investments to accomplish their goals and thrive among the competitors.

Getting an MCA

Companies can find investors that either work independently or with an organization to gain the required funding. They can also opt for loans from banks. However, the much better alternative is a merchant cash advance that focuses on the growth of a business. Companies prefer MCA as the conditions of the loan are appropriate to their predicament. The best part about getting an MCA is that paying it back is extremely convenient. You’ll only be paying back a specific percentage of your monthly earning. And, if there’s a month where you don’t generate revenue due to whatever reason, you won’t need to pay the finance company back anything. Receiving timely fundings can save companies from derailments. If you’re looking for a financial organization that can get you the resources you need to boost your business, 2M7 is just the company you should work with. We’ve helped hundreds of companies like yours in the past with our incredible 97% approval rating. We offer merchant cash advances to businesses in all industries and of all sizes. Gain an edge over your competition and contact us today.

As a small business owner, when you go to a bank for a business loan, instead of looking at the performance of your business, the bank will check your personal credit score first. This means, even if your business is performing well and profitably, a fair credit score of 600-650 could prevent you from getting a small business loan. A credit score of under 600 portrays you as a high-risk borrower and will make it nearly impossible to borrow even a small loan.A low credit score stops business loans being disbursed to profitable and stable businesses. Bad credit history will follow you and your business for years. For example, you may have owned a successful business for a few years and now you are looking for funds to expand into another city or purchase more equipment, but when you visit the bank, the loan officer turns you away. Why? The answer is easy – his decision is based on your poor personal credit history.

Credit scores

There is no standard scale that defines your credit score. That evaluation varies from a credit agency to a credit agency as they set their own criteria. A credit report from Equifax may give a person one number, while a credit report from another institution will very likely suggest a higher or lower credit score for the same person. Credit scores in Canada are officially assessed by two entities: Equifax and TransUnion.

• The higher the credit score, the safer it is to lend to you
• Credit scores typically range from 300 to 900

Credit score brackets:

1. 800-900 – Highest bracket; excellent credit history
2. 700-799 – Very good credit history; lowest interest rates available
3. 650-699 – the Lowest score that can receive standard loans
4. 600-649 – Fair score; higher interest rates applicable
5. 300-599 – Low scores; less likely to receive business loans

Therefore, if you have a credit score of 649 or lower, it will dramatically reduce the chance of your business loan being approved. Since major banks first look to the business owner’s personal credit score, even exceptional business performance may not make you eligible for loans, or high-interest rates may apply to you.

What happens if you have a low credit score?

If the borrower has a bad credit score, other than a higher likelihood of being refused a loan by the major financial institutions, there are a few other ramifications:

• Higher interest rates on loans and lines of credit
• Difficulty finding business premises
• Security deposits required by utility companies
• Higher insurance premiums for business assets

Private lenders help small businesses with bad credit history get loans

Fortunately, there are ways of getting business loans for your company even if you - the borrower - have bad credit. To get small business loans with bad credit history, private lenders are one of the best options. These are more local lenders, better tuned to market conditions, who offer more flexible loan options. There are many private lenders that can provide small business loans. Bad credit history or credit score will make little or no difference to the loan, depending on the type of loan you opt for. Moreover, the application process is much easier and repayments are more flexible. It is possible that a private lender will ask you to open a business bank account with them before they provide you with funding.

How to get a business loan with a bad credit score?

Merchant cash advance (MCA) lenders provide cash advances, customize private terms and business equity line of credit to small business owners. This would be the best way to get a business loan with no credit assessment, and beneficial repayment terms if you happen to have a bad credit history. Instead of checking your personal credit score, a merchant cash advance provider assesses your business’ performance and monthly credit card sales.The MCA lender will give you an upfront sum of cash in exchange for a percentage of the business’s daily credit card income.  The MCA lender will tie into the credit card processor directly to settle credit card payments so the business owner does not have to worry about missing the payments or dealing with administrative processes. There are many pros and cons of having MCA but regardless of that, it is still considered as the best way to get business fundings.A private term loan gives you the same perks as a small business loan from a major lending institution. However, the private lender does not give the same weight to your bad credit when deciding on the small business loan. Instead, the lender mitigates the risk with fixed daily repayment terms.A business equity line of credit is much less reliant on the credit history of the business owner. Therefore, if you have a bad credit history and require financing for your business, you can use your equity in the business as collateral. A business equity line of credit helps businesses resolve their cash flow issues, though it does require putting up a part of your ownership as collateral.

Start-up bad credit business loans

For entrepreneurs with bad credit seeking business loans for their start-up, private lenders and alternative lending are the best options. Where small business loan applications at major institutions have a less than 25% chance of approval, merchant cash advance (MCA) approvals stand at over 97%! This is because MCAs do not evaluate the business owner’s personal credit score, and only take into account business performance. Besides that, MCAs can be approved within 4-6 hours.Government loans and grants are also great options. Both have flexible repayment terms and offer additional business support to small entities. However, some of the government loans may require a good credit history and may have strict eligibility criteria.

Using business loans to rebuild your credit

Apart from using funds to expand their business, business loans can help borrowers improve their personal credit scores. Once you opt for an equity line of credit or a private term loan, make sure to pay on time and your credit score will improve over time. As a result, the better your credit score is, the lower your interest rates will be and you will have a greater chance to access financial lending markets.Borrowing is an inherent part of any business regardless of its size and the industry it operates in. Major financial institutions and private lenders usually lend to businesses with exceptional credit histories opposed to those with a bad one. Don’t let your bad credit history stop your business from getting the financing it needs. Options such as a merchant cash advance (MCA) will provide you with the required funding, as well as improve your credit card history in general. If you think it might be a good solution for you, do not hesitate to get in touch with us.