Fast Cash Advances
During the course of normal business there are a number of crucial expenses that need to be paid in order for your business to run smoothly. Such expenses include working capital, making payroll, buying equipment or machinery, marketing and advertising, tax payments, paying vendors and purchase inventory. Oftentimes a company may find the need to take care of these expenses immediately, but don’t have access to fast small business capital to make sure these expenses are met in a timely fashion. Even more, a company may find they don’t have the business credit or collateral to obtain a fast business loan or line of credit from a traditional lender. If they do meet a large bank, small bank, community bank or credit union’s criteria, the process of obtaining business funding may take months to complete.
For many small business owners, waiting months to obtain financing to take care of their needs simply isn’t an option. Every day left without fast funding can mean money lost (including profits) but also put the business (and its employees) at risk. For businesses and merchants who deposit at least $10,000 into their bank accounts during the course of a month, fast business cash advances may be an option.
Business Cash Advance Details
|Funding Time||1-3 days|
|Minimum Deposits||$10,000 a month|
What is a Fast Business Cash Advance?
A fast business cash advance (or sometimes referred to as an ACH business loan) is the sale of a company’s future bank deposits (4-24 months) in exchange for fast merchant funding at a discount to the lender. A business cash advance is slightly different than a merchant cash advance because an MCA loan is the sale of a merchant’s credit card sales, instead of bank deposits (like an ACH loan).
When a business is approved for a cash advance loan, the lender will deposit the funds directly into a business bank account, and then the small business will make automatic daily payments to the lender during business days (not weekends or holidays) through the use of ACH (automated clearinghouse) remittances directly from company’s bank accounts. The amount taken-out each day as repayment is agreed upon in contracts before funding.
What Businesses Qualify?
There are few industries that can’t get funded with a business cash advance, as approval rates among ACH lenders can be as high as 95%. In fact, industries that traditional banks and credit unions wouldn’t touch, are actually accepted by cash advance funding companies. On top of that, there is never a restriction on how the funds are used. Once the money is deposited into the bank account, it is for the small business to decide on how its put to use.
Minimum credit requirements usually include a 500+ credit score, although some lenders will fund any and all credit types (including bad credit business loan types). But most lenders care more about seeing a prospective borrower have at least $10,000 a month in deposits, at least 10 individual deposits, no insufficient funds, and a monthly balance of around $3,000. Now, while these are common requirements throughout the ACH loan industry, these requirements aren’t necessary among all lenders. Oftentimes a lender will take trends in deposits and the nature of the business cycle (especially among seasonal businesses) into account.
Business Cash Advance Documents Needed
To get approved and funded for a business or ACH cash advance, a business lender will require the following documents:
- 6 months bank statement
- Copy of owners drivers license
- Voided check
If the financing request is for $100,000 or more, a lender will usually ask for additional documents including:
- Profit & Loss statement
- Articles of incorporation
Business Cash Advance Funding Process
Unlike the cumbersome process associated with a traditional bank loan or other alternative business loans, the cash advance funding process very easy and relatively painless. How it works:
1. Credit Application
While credit isn’t a determining factor in getting a loan, the lender will still run credit checks to make sure there aren’t tax liens and other issues that could affect funding. The application process takes an hour if not minutes.
2. Provide 6 months bank statements
The lender will require a company’s most recent 6 months of bank statements to determine cash flow trends, number of NSF’s, calculate average monthly deposits, etc.
3. Receive offer from lender
After a credit check has been run and cash flow analysis completed (1 hour process) the lender will then supply the business or merchant with a funding offer. If the business accepts the offer, the lender may have additional stipulations that need to be met (like supplying photo ID, voided bank statements, P&L)
4. Get funded
Once all stipulations have been met, the lender will place a call to the business owner and explain the terms of the funding again, and then wire the funds directly into the business bank account.