What is AR Funding?

Does the thought of not making payroll keep you up at night? Running a small business is tough! This is especially true when you have to rely on your clients paying their invoices on time to pay. Many businesses face this challenge so you should not feel like you are alone in this. This is where AR funding can come in handy.

When you have a lot of outstanding invoices with your clients and have a major business expense that is coming up, you have the option to leverage an AR funding provider to cover the cost. This process involves selling off your unpaid invoices to the provider. The business will then quote you how much they are willing to pay you in exchange for the full value of the invoice. The amount of time left for the client to pay, the likelihood the client will pay the invoice, and the full value of the invoice will all determine how much you will be given by the provider.

An important thing to consider when choosing an AR funding provider is the fact that you are giving up a portion of your profits in exchange for cash fast. Ask yourself how fast you need the funding and how likely you feel the client will repay you on time? Do you need the cash before the time the invoice is due? Then you should consider AR funding for your business.

What other options exist for funding fast?

AR funding is the not the only option out there that can get you access to cash quickly. You should also consider another option before selling your unpaid invoices at a discount plus additional fees. The options we are referring to is a merchant cash advance.

What is nice about a merchant cash advance, unlike AR funding is you are not giving up a portion of your unpaid invoices to get the cash fast. Instead, you will pay a fixed daily percentage of your credit card sales until the amount of the advance has been paid back in full. Think about it this way, if you have a slow month you will still pay the same fixed percentage vs. a flat amount. Many businesses like this option because they don’t have to be worried about making a fixed payment each month even when they don’t have the cash.

How does a merchant cash advance work?

1. Apply online through our simple online form!
2. We will get back to you in less than 24 hours letting you know if you have been approved or denied.
   1. We accept 90% of the business that meet our minimum requirements.
3. After you have been approved and accepted our offer, we can get you the cash you need in just three short business days.
4. You can then start spending the funding you need to, in order to get your business back on track. That means if you need to make payroll, you can pay your employees just three days after getting approved.

What are the requirements to qualifying for a merchant cash advance?

• You have been operating as a business for at least six months.
• Your business generates at least $10,000 a month in revenue.

What type of businesses should use a merchant cash advance?

If you are considering leveraging AR funding or a merchant cash advance considering the following:

• Do you do a majority of your transactions via credit cards?
• Do you need access to funding fast?
• Are you in the construction industry, own a dental practice, or in the retail industry?

All of these are reasons to consider using a merchant cash advance. If you still have questions, we are here to help answer them!

Ready To Get Started?

Contact eBusiness Funding now at 305-985-6593 or complete the contact form on this page now.

Using Business Asset Based Lending to Grow Your Company

If you are looking to expand your business and take it to the next level, business asset based lending may be a good option for you. Business asset based lending is a good option for businesses that are often seasonal and generate a lot of invoices. For example, a construction company will do contracting work for their clients and often have a net 30 to net 90-day window before they are paid back. Sometimes a business can’t wait 90 days to be paid back. After all, they still have to keep the lights on! That is where business asset based lending comes into play.

The Many Forms of Business Asset Based Lending

Traditional Bank Loans

Banks can provide a business with an asset-based loan; however, it will come with its challenges. It is no secret that receiving a business loan from a bank is tough. We live in a world with Know Your Customer (KYC) policies that have raised the lending standards of all financial institutions. If you are going to secure a bank loan you will need the following:

• A Strong Business Plan
  • A bank will require a plan of how you expect your business to grow over the next several years.
  • Banks will expect that you deliver a plan of exactly how the funding will be used.
  • You should also plan to turn in your financial statements from the last few years.
• At Least 2 Years In Business
  • In order to be able to turn in business financial statements from the past few years you have to have been in business for the past few years. Typically, a business must be operational for two years before they can receive a bank loan.
• Good Credit History
  • This is for both your personal and business credit history.
• Collateral
  • When applying for a bank loan, the bank will look to hold personal or business assets as insurance for you to pay off the loan.

Not every business has the above requirements so it makes getting a bank loan practically impossible for some, especially new businesses.

Alternative Asset Based Lender

Alternative lenders are popping up all over the market. An alternative business asset based lending provider will look at your accounts receivables and apply a certain value to them. This value will often be between 70-80% of their full value. They will offer this amount to you in cash. Depending on the lender, they will look for different things when offering you a price for your invoices. They may consider the credit of the client or the number of days still left for the invoice to be paid. This is a good option for those that have a lot of invoices or accounts receivable and need funding quickly.

Merchant Cash Advance

There are many benefits to a merchant cash advance in comparison to a traditional bank loan that is tied to assets.

• No Collateral
  • We will not hold any personal or business assets against the funds.
• Personal credit score of 400 or above
• Short business history is not a problem!
  • We look for companies who have been in business at least six months.
• No business plan required.
  • When you apply we are not going to ask you for a three to five-year plan for your business.
  • We are not going to ask how you plan to use the funding either. We only require that it be used to help you grow your business.
• Quick Approval
  • We can get you approved for a cash advance within 24 hours!
• Cash in hand fast!
  • You can have the cash in your hand just three short days after you apply.

As a cash advance provider, we are all about helping you experience the success of your business. We are here to help you. So what are you waiting for? Fill out our simple form to get started today!

What Is Business Asset Based Funding?

When a bank decides to give a company funding, what they are really doing is giving the business asset based funding. Almost all loans, advances, financing are asset-based. Even if you choose an unsecured business loan, the bank is looking at your business overall as an asset. Ultimately lenders do not want to collect on collateral so they are betting on you and your assets. Business asset based funding ultimately means funding based on your accounts receivable or inventory that can be used as collateral. Even with a merchant cash advance, it is based on the future asset of your daily credit card sales.

Whenever you take a loan out you are putting your business on the line. Both lenders and borrowers are taking a risk. Lenders are concerned the business won’t pay them back. Borrowers are worried what happens if they can’t pay the lender back.

So What Is Asset Based Lending?

Business asset based funding will typically take advantage of your business’s unpaid invoices or accounts receivable. Most asset-based lenders are looking for a secured asset, not a future asset. That isn’t the case with a merchant cash advance, however.

Generally, business asset based funding lenders and borrowers agree on a specific percentage of the unpaid invoice to get in cash. Often times this is between 70 and 80 percent of the full value of the invoice. The lender is hedging their risk by not giving a larger percentage. In some cases depending on a number of factors, a borrower might be able to receive close to 90%.

Factors That Can Help Determine The Amount Of Cash You Receive Include:

• Age of the Invoice
  • Newer invoices will receive a higher value
• Credibility of the Client
  • Depending on who the client is that owes the money for the invoice can help or hurt the value you can receive from an asset-based lender.

Pros To Business Asset Based Lending

This type of funding will give your company access to funding quickly so that you can move on with running your daily operations. It is much simpler than a traditional bank loan to apply for and can get your business to the next level.

Risks To Business Asset Based Lending

Lenders are going to dig through your accounts receivable to find your best ones. They are going to look for a quick return on their lending as well. Your invoices with less than 60 days left to pay are going to be the ones that will appeal to the most lenders. Because of the risk associated with this kind of funding, you can lose out on a large percentage of your cash flow.

Because business asset based lending is risky to companies it can make some businesses nervous. They also will cost more than traditional financing from a bank. Depending on your lender the interest rate can vary. Often times you can expect to have your clients pay your lender directly instead of the money running through you and then to the lender. Often times this is an uncomfortable situation to owners who no longer control their own business’ finances. Especially if you continue to use asset-based lending.

Other Options

There are other options out on the market for you. We mentioned a merchant cash advance at the beginning of this article. With a cash advance, we purchase your future receivables and give you cash today. Repayment is automatically drafted as a percentage of your company’s daily sales until the advance has been paid in full.

For many companies, this is a better option than having a lender sort their receivables and select what they are worth.

If you are interested in this type of funding, give us a call today and we can talk you through our process.

How Do I Get Business Asset Based Financing?

Often times businesses that deal with a lot of invoices from clients are not able to pursue new ventures or opportunities.  This is due to the fact that their cash is held by their clients until they pay.  We all understand and probably have those slow paying clients. An area of opportunity for companies that deal with a lot of invoices, such as the manufacturing industry, is business asset based financing. This type of financing allows you to free up capital and be able to look into new expansion opportunities. And unlike a traditional bank loan, our process is much simpler.

The Benefits Of Business Asset Based Financing

• If we are talking about an asset based loan through a financial institution, there is less risk. This is due to the fact that it is a secured type of funding which means the interest rate can often be lower.
• Typically, companies that are providing business asset based financing do not take your credit rating into account when granting you the funding. This can be an advantage to someone who has been turned down by a bank in the past for having low credit.

The Risks Business Asset Based Financing

Typically, in asset based financing you are giving up a portion of your unpaid invoices.  This is in exchange for cash immediately.  But ultimately it is risky because what if your client doesn’t come through and you have already spent the money?  What if you really needed the full 100% of the invoice to make ends meet?   Some will utilize the asset based loan as a revolving line of credit which can be risky as well.  This means that as an invoice is paid off the amount you can borrow gets larger again. If you are bad with balancing finances having access to a line of credit can do more harm than good.

How Can I Qualify For Business Asset Based Financing?

• Do you have a solid management team in place running your business?
• Do you have a stable history of your clients paying you back on time?
• How do your assets typically perform?
  • This can be your inventory or your invoices based on services to clients
• Is your financial information up to date and accurate?

Asset based business financing provides a much more flexible option to funding than a traditional bank loan.  Most alternative lenders are not going to ask you how you plan to spend the money or look at how you plan to grow or expand your business.  If you go through a bank for a business asset funding, you should expect to be asked about your business plan.  An alternative lender is just going to look to make sure they are going to get their funding back and make money.  This is a good short-term funding solution and should rarely be used as a long-term financing option.

Business asset based financing is not for every business model. Some do not meet the requirements or are really not in the targeted industries. A lender in this market is going to look at the quality of your receivables and give you a value based on a certain percentage off.  This can be hard for some businesses to realize what they are giving up to get the cash in their hands quickly.

A Better Solution

This why another option for businesses that are looking to get cash quickly exists.  That option is a merchant cash advance.  This type of business funding can get you cash in your hands in just three days. And the application process is simple unlike a bank’s.  Something our clients like is that we do not hold collateral against our advances at eBusiness.  Instead, we take a percentage of your credit card sales on a daily basis until your advance has been paid off.

So if you are considering business asset based financing, why not reach out to us? We can give an option that will have you growing your business later this week!