FRA Financial Group Founder Joe Roosevans is an industry veteran who has built one of the nations’ most successful Independent Marketing Organizations – Financial Resources of America and its affiliated companies, including FRA Financial Group.
Large commercial banks, which are used to actively court the small business credit pulled from the market over the past year, only to sit on the capital, which was given to them by the government to “better times”. When is an estimate of “time” can be achieved is anyone’s guess, but while businesses need capital to survive.
Fortunately, there are many alternatives that are out there for small and medium-sized businesses. Normally, this capital can be obtained relatively quickly, even if the business and personal credit is solid. However, the business must be under the illusion that the business of working capital loans is cheap, after the economic crash in the world. With more business failures during the observation of all-time high, it is incredibly dangerous for lenders, who want to make it their livelihood. For this reason, they should be compensated accordingly, or may become victims of their own bankruptcy.
Pros – the best conditions possible for small businesses. Loans from private banks, and partly (90%), guaranteed by the government against default.
Disadvantages-stacks of paperwork are required from the audited financials, P & L statements, etc. Processing time can run up to 4 months, and the approval rate is low. Only the best credit, applicants must apply and even then, certain industries such as restaurants are almost impossible to confirm this credit environment.
Financing Times, 2-4 months
Pros-If you own your commercial property, and it does not have any major problems or environmental concerns, it is a very good chance with rates ranging 6-14% depending on credit quality and other factors.
Disadvantages-It is difficult to have your own commercial property values fell to the bottom of the last 5 years. In addition, you will have to pay out of pocket up to $ 3,000 a commercial evaluation and you can still be confirmed, depending on the assessor’s return to. Look for the processing times of 4-8 weeks before you know it your filing results.
Financing Times – 4-8 weeks or more
Equipment secured loans / lease
Pros-It can be an attractive option for companies that have their own, or have significant equity capital equipment that they use in everyday operations of their business. Depending on the credit quality, the price can be anywhere from 10-40%, depending on the file and software securities.
Weaknesses-As hedge against default, all the lenders in this arena will only lend on a percentage of total estimated cost of equipment. Keep in mind that almost all cases, the equipment is used and the loan will be against the depreciated value of equipment or the expected price at auction, minus any money on loans used to buy. Thus, the $ 100,000 dollars of equipment purchased 8 years ago may be worth only $ 60,000 dollars today, and the lender is only going to lend against the expected value is generally less than 50% of the auction price. Expect to take a further blow to the lending rate if the loan is a solid company cash flows is weak. In the above example, the $ 30,000 loan would be considered good.
Financing Times -10-14 days
Pros, it is not technically a loan, but is expected to purchase receivables at a discount. This method is a great company that works primarily in “net 30” model, and gets most of its revenues through cash or cash equivalents. In principle, a factoring company in advance you up to 90% of the face amount of your lump sum is expected to receivables. Then the payments from your customer are directed to a factoring company through a legal agreement. The difference between the sum of the amounts paid and advanced factoring company represents the profit margin to address. This method is very fast, and no early repayment is necessary, because our customers send their payments before you owed factoring company.
Weaknesses-Your customers by law to be notified about this change and where to send payment before due to your company. Some companies are not comfortable with the customers know about your company’s finances level. In addition, if a company’s accounts receivable credit for your company is bad or you are the company’s credit is bad, the deal may be rejected by the factoring company, or come from a steep discount, that can run as high as 40%. The original amount due. In this case, $ 100,000 dollars owed to your company and would only net $ 60,000 in advance.
Financing Times – 70-10 working days
Merchant Cash Advance
Pros – Think of it as a “little brother” in accounts receivable factoring. Companies that accept credit cards as a primary means of payment is a guaranteed good amount of their future credit card receivables. This method works well for businesses with high volumes of credit card transactions and a low average ticket and is ideal for those companies that may be difficult credit circumstances. Typically, the owner of the credit score dropped to 500 is OK as long as the business processes at least $ 10,000 per month. Usually the documents associated with this type of advance are the minimum, in addition to Financials to be a short one-page application.
Disadvantages – Because it is risky to progress, capital is expensive. The upside is that payments are made every day of your existing credit card processing stream at least 5 times a week. This means that although these advances are expensive, they are usually paid back within 6-12 months. Payments generally cannot match more than 11% of its gross monthly income. The company may also be required to change credit card processors, and as a financing transaction requirement. This is usually a pretty painless process, but some companies may be difficult or require you to buy new equipment wipes.
Financing Times – 5-7 business days
Only bank cash advance
Pros-Looks like the marketing of cash advance, but for those companies that do not accept credit cards or do not have significant credit card volumes. This type of advance is based solely on the business bank account, the average strength and balances it. Funding amounts range between 2 and 4 times the average monthly balance are common. This type of advance also does not require documents or audited financials and a lot of mostly short-term (6-12 months max)
Weaknesses-Your business bank account should be in good shape, healthy, average monthly balance (more than $ 4k) and very little “negative balance” a few days, and the NSF is at your expense. In addition, the owner of the credit must be a minimum range of 600-650, depending on the size of the transaction. Since capital is very risky, and expensive.
Financing Times – 5-7 business days.
Credit card loans receivable
Pros – also like to trade the cash advance, but governed as a true business loans and cash advance. This means that timely payments will help your business credit. Rates are typically 30-50% lowers than a comparable merchant cash advance, but still expensive compared to a bank loan. The payments ACH’d from a business bank account and no credit card processing stream, there is no requirement to move Credit card processor. Owner of credit up to 550 are acceptable, but with more stringent emission standards than the merchant cash advance. Terms are short, from 6-12 months and the payments are made each day, 5 times a week in most cases.