Although frequently misused, Working Capital Loans and Merchant Cash Advances offer short-term, quick fix solutions that can be a life-saver if used with caution and care. Nevertheless, for a high-revenue, now-or-never opportunity or bridge they can be your best option.
(Without affecting your credit!)
Working capital loans and merchant cash advances can be understood as the purchase and sale of your business' future revenue at a discounted price, which is usually represented by a factor rate. For example, a borrower or "buyer" can purchase 15% of the projected revenue of your business over the course of the next 10 months. If your business is generating $25,000 per month, this equals about $250,000 in revenue and the effective purchase amount comes out at $250,000(0.15) = $37,000. Let's now assume the agreed discount amount is of 20% $37,000(0.80) = $29,600. Your business would be effectively selling $37,000 worth of future revenue for $29,600 right now.
In this particular example the discount would be represented by a factor of 1.25 and the loan terms would be the following:
Funded amount: $29,600 at a factor of 1.25 and paid back daily or weekly over 10 months or until $37,000 is reached.
Who Qualifies for Working Capital Loans and Merchant Cash Advances?
(Based on American SBA previous clients)
Working capital loans are the easiest and fastest application process for business funding. You can easily apply by filling up a quick 5-minute application and sending in your last four months of bank statements.
Your advisor will go over your documents and if there’s any information missing they will be in touch shortly.
You can find the application by clicking here.
Virtually all industries can benefit from working capital. Some more than others, but given this product provides such flexible use-cases, opportunities arise at any situation.