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5 Cash Flow Based Lending Options to Take Your Business to the Next Level

Cash flow based lending options can be great for fast funding. Both PayPal and Square offer these types of options. Credit Suite has similar options as well, including:

  • Revenue Based Lending
  • Purchase Order Financing
  • And Accounts Receivable Financing.

Using these types of funding allows you to get the funds you need based on income and without good credit. Repayment is typically based on cash flow as well, meaning the more you make, the faster you repay the loan.

Cash Flow Based Lending Options Can Help You Fund Your Business Fast

Cash flow based lending options are those that are extended based on a company’s expected cash flows. This refers to the amount of cash that goes in and out of a business within a specific period of time. The amount of cash flow is what lenders use to make approval decisions.  Repayment comes from this amount as well.

Typically, you will need to have a few years in business to qualify. You may also need to meet a certain minimum credit score requirement. Mostly, you will need to prove historical cash flow, and present your accounts receivables and accounts payables.  This is how the lender will determine how much to loan to your business.

There are a number of cash flow based lending options available. Some service providers offer this type of funding, such as PayPal and Square. There are also funding types through other lenders that are closely related, such as those that rely on your accounts receivable or open invoices.

Here’s a little about each one to help you decide if this type of funding is right for you.

#1: PayPal Working Capital Loan

You can get a loan from PayPal if you already have a PayPal business account. There is no personal guarantee requirement, and loan amounts and eligibility depend on your sales via PayPal. Also, applying will not result in a credit check.

To be eligible, you must:

  • Have a PayPal Premier or Business account for 90 days or more
  • Process at least $20,000 in annual PayPal sales if you have a Premier account, or at least $15,000 in annual PayPal sales if you have a Business PayPal account
  • Pay off any existing PayPal Working Capital loan

Repayment is automatic as a percentage of each PayPal sale.  As a result, the amount you repay each day changes with your sales volume. The more you sell, the more repayment progress you’ll make that day. On days without sales, you’ll make no payments. Yet, there is a minimum repayment requirement every 90 days.

Depending on the loan terms you choose, you have to pay at least 5% or 10% of your total loan amount, that’s the loan plus the fixed fee, every 90 days. The 5% minimum applies to loans estimated to take 12 months or more to be repaid, based on your business’ past PayPal sales and other factors. The 10% minimum applies to loans that should only take 12 months or less to repay.

#2: Square

You can get similar business loans through Square, and they also will not affect your personal credit score. Eligibility is based on a variety of business factors, including its payment processing volume, account history, and payment frequency. Square will send a customized offer to users based on their card sales through Square, up to $250,000.  There is no interest per se. Rather, you’ll pay an ongoing flat fee.

The fixed fee is the difference between the total owed amount and the initial loan amount. The fixed fee will never change, regardless of how quickly or slowly you pay off the loan. Just like PayPal, if sales are up one day, you pay more. Consequently, if you have a slow day, you pay less. A minimum of 1/18 of the initial balance must be repaid every 60 days.

They don’t require collateral for business loans of $75,000 or less. In contrast, for loans over $75,000, they take a security interest in your business assets. Then they will file a UCC statement with the Secretary of State where your business is organized. There is no personal guarantee requirement.

#3: Business Revenue Lending

With a similar basis for getting funding, business revenue lending is another of the cash flow based lending options.

It involves raising capital from investors, who then get a percentage of the enterprise’s ongoing gross revenues in exchange for money invested. Investors get a regular share of business income until the agreed upon amount is paid. Often, this amount is a multiple of the principal investment. It is usually between 3 – 5 times the original amount.

Since repayment of the loan is based on revenues, the time it takes to repay the loan will fluctuate. The faster revenue grows, the quicker you’ll repay the loan, and vice versa. The percentage of monthly revenues committed to repayment can be as high as 10%. Monthly payments will fluctuate with revenue highs and lows and will continue until you pay the loan in full.

Terms for the Credit Suite business revenue lending program are:

  • Collateral Required: Consistent revenue verifiable through bank statements
  • Loan Amounts: $5,000-$500,000
  • Term: 3-36 months
  • Factor: 1.10-1.45%
  • Credit Requirements: 500 credit score or higher
  • No recent bankruptcies
  • Business must earn annual revenue of $120,000 or more per year
  • You must be in business for a year or more
  • The business must do over 5 small transactions each month
  • Or bring in at least $15,000 monthly revenue with 6 months’ time in business
  • Financial services industries are prohibited
  • 6 months business bank statements required with application

#4: Account Receivable Financing

AR financing is another of the cash flow based lending options available. It allows you to use outstanding account receivables as your collateral for business financing. You can get as much as 90% of receivables advanced, and you get the balance after the invoice is paid in full.

Terms for Credit Suite account receivable financing are:

  • Collateral Required: Account receivables
  • Loan Amounts: $10,000- $10 million
  • Term: Up to 95% of receivables can be advanced within a week.
  • Rates: Starting at prime rate 2%
  • Credit Requirements: Minimum 500 FICO score
  • Receivables must come from another business or government agency, not an individual
  • Business must be open for at least 1 year to qualify
  • Medical receivables must have $1 million in annual sales or more
  • Breakdown of existing receivables and a sample invoice required with application

#5: Purchase Order Financing

PO financing is also closely related. This is funding to a business with a large purchase order or contract, but the business is unable to fulfill it. A lender loans the money to complete the order, and charges a percentage for the service. The company can then fulfill its order or contract.

The difference between purchase order and accounts receivable financing is, purchase order financing involves a company lending you money to fulfill purchase orders. Accounts receivable financing involves a company buying outstanding invoices. However, when you get to the center of it all, both are based on cash flow.

Credit Suite purchase order financing requirements:

For approval, lenders will typically review your outstanding purchase orders that need to be filled. They want to be sure the purchase orders are legit and the suppliers you are dealing with are credible.

If so, then you can get approval regardless of personal credit history. Rates tend to range from 1-4%. Furthermore, in some instances, you can get 95% of your purchase order in advance.

Cash Flow Based Lending Options Can Help Take Your Business to the Next Level

The beautiful thing about cash flow based lending is, you can get funds even without a strong credit score. If you are making the sales, you can get the money. That makes it easier to fulfill orders and keep making sales, which in turn allows you to grow your business bigger and stronger than ever.

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How to Get a Credit Based Loan with No Cashflow or Collateral!

Do you need business funding but lack the cash flow and collateral that most lenders require? In other words, you need a credit based loan. But, is that even a thing?

Are Credit Based Loans a Real Thing?

Honestly, no. Still, bear with me. When we talk about credit based funding, we are talking about funding for your business that is based on credit only.

In contrast, most traditional loans are what is called “full-doc” financing. Meaning, while creditors may take business credit or personal credit into account, other factors weigh heavily on the decision.

For example, potential borrowers are required to hand over financial statements, tax returns, check stubs, and more. As a result, the process can be much longer and more complicated.

Credit Based “Loan” Options

Yet, if the idea is that any credit is, at its core, a loan, then there are credit based loan options available. Now, these funding options do not necessarily take personal credit into account, though some may. The point is, they are “no-doc” financing options. You do not have to provide documents like:

  • check stubs
  • financial statements
  • tax returns
  • or and other documents

Some examples of credit based loan options include:

The Credit Line Hybrid

A credit line hybrid is a form of unsecured funding. Also, our credit line hybrid has an even better interest rate than a secured loan. The best part is, it’s a credit card stacking program, and many of the cards report to the business credit reporting agencies. As a result, you can build business credit and fund your business at the same time.

For approval, you need a good credit score or a guarantor with good credit. Consequently, the minimum personal credit score is a FICO of 680. Yet, you will not have to supply any financials, and you can get a loan of up to $150,000. It’s important to note, some of the cards in the program may report on your personal credit.

Business Credit Cards

Business credit cards are universal-type credit cards, like MasterCard. In fact, they can be used pretty much anywhere. Even better, some of these cards have rewards programs as well. However, It’s important to review rewards programs thoroughly. Unfortunately, some may not be relative or attainable for your specific business.

Currently, business credit cards are the main source of credit-only based business funding. Generally, you will need to have at least 14 accounts reporting to the business CRAs. Additionally, they may require a minimum time in business or minimum number of employees. Here are a few examples, but there are many business credit card options out there.

Alpine Bank Visa Platinum Rewards

Alpine features:

  • No annual fee
  • One point per dollar spent
  • Decent APR, comparatively
  • Low spend amount to earn bonus

Amazon Prime Store Card

Of course, Amazon is such a versatile marketplace that this card can be useful for most any business. It features:

  • 5% cashback on Amazon purchases
  • No annual fee

Sadly, limits seem to be low. Also, there are reviews of this card on the Amazon website. Certainly take the time to check them before applying.

Bank of Hope Business Rewards Visa® Credit Card

Bank of Hope card Features include:

  • No annual fee
  • Triple points on gas
  • Double points on travel and dining
  • One point per dollar on all other purchases
  • Easy to meet minimum spend for bonus points for most

Chase Bank Ink Business Cash®

Chase Bank Ink Business Cash top features include:

  • Fairly decent interest rates
  • No annual fee
  • 5% cash back on the first $25,000 you spend on certain business products, i.e. office

CitiBank Costco Anywhere Visa® Business Card

First, you must be a Costco member to get his card. It offers:

  • 4% cash back on eligible gasoline purchases, including buying gas at Costco limited the first $7,000 per year
  • After that, get 1% cash back
  • 3% cash back on restaurant and eligible travel purchases
  • Earn 2% cashback on all other purchases from Costco and Costco.com
  • 1% cash back on everything else
  • There is no annual fee

A Credit Based Loan Can Help You Get Funding Without Cashflow or Collateral!

Fortunately, credit based funding is a legitimate way to fund your business needs without the need for collateral or meeting cashflow requirements. As noted, the most common source of this type of funding is business credit cards, or programs like the Credit Suite Credit Line Hybrid. As you can see, there are plenty of possibilities. The trick is, you just have to find the one that will work best for your business.

The post How to Get a Credit Based Loan with No Cashflow or Collateral! appeared first on Credit Suite.

Exactly How To Earn Residual Income With A Work From Home Based Business Opportunity?

Just How To Earn Residual Income With A Work From Home Business Opportunity? Allow’s encounter it, there truly isn’t anything around that defeats the capability to gain recurring earnings. As soon as is one of the most effective cash making principles in presence and also it has actually made several business owners unclean abundant, obtaining …

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Reward Based Crowdfunding vs. Equity Crowdfunding

Crowdfunding can be a great option for funding a business, if you run a successful campaign.  The problem is, though some campaigns are very successful, many are not.  It helps to understand the different options available.

Which Option is Best for Your Business: Reward Based Crowdfunding or Equity Crowdfunding?

There are many benefits to crowdfunding, the most popular being the debt free financing of your business. However, there are a couple of different types of crowdfunding, and there are even more platform options.  Some options work better for certain types of businesses than others.

Credit Line Hybrid Financing:  Get up to $150,000 in financing so your business can thrive.

What is Reward Based Crowdfunding

rewards based crowdfunding Credit SuiteReward based crowdfunding is crowdfunding in which backers receive a reward for their investment.  This could be something as simple as a thank you note or as elaborate as the actual product.  For example, a jewelry maker may offer a free pair of earrings.  

One smart jacket company offered free coats with investment, and a cooler company offered free coolers.  One word of warning, be sure you can keep your promises.  More than one company has gone south or at least ended up in major trouble because they could not keep their promise to investors. 

What are Some Benefits of Reward Based Crowdfunding?

The biggest benefit of reward based crowdfunding is that it’s one of the cheapest ways to raise capital.  There is no collateral requirement and no credit check or prior business experience required.  There is no need to have professional financial or legal help, as the process is simple.  You do not give up any equity or control in your company, and you get tons of exposure to your audience on the front end. 

That said, it’s not all sunshine.  Many, if not most, campaigns do not raise enough funds to fully finance the business.  That means other means of financing have to be utilized. Also, some platforms will not allow you to access any of the money if you do not reach your goal.  

Reward  Based Crowdfunding vs. Equity Crowdfunding

The major difference in these two types of crowdfunding is what investors get for their investment.  With reward based crowdfunding, investors receive some incentive for their donation that is not equity in the company.  With equity-based crowdfunding, the investor receives equity, or a share in the company. 

Another difference is that, as a general rule, equity-based crowdfunding brings in larger amounts of money.  This is because it draws a different type of investor.  The question then becomes, why doesn’t everyone choose that?  The key is, some businesses are better suited for equity-based crowdfunding and some are better suited for reward based crowdfunding. 

Is Reward Based Crowdfunding Best for Your Business? 

So, which types of businesses do best with crowdfunding based on rewards rather than equity? Typically, this works best for startups in creative fields.  Those that do not qualify for traditional business loans, but have a strong project.  Sometimes these businesses just want to test the market, and a crowdfunding platform is a great place to do that. 

It doesn’t really work well for those businesses with a complicated product or service.  It can be hard to explain the value of these types of companies to the masses.  This type of funding tends to work best for businesses that offer:

  • New Local Services 

If you think about it, this  makes sense.  If you want to open a local business, especially in an area where there is a direct need, it could do well with small business crowdfunding.  Local Lift is designed specifically for local businesses to request funding, gauge interest, and even build a customer base before opening.

  • New High-Tech Gadgets

This doesn’t mean just a new take on what is already out there.  Rather, this is something that is completely unique.  That is what is going to get the most support.  Also, it needs to have a working prototype and there needs to be research behind it. 

  • Unique Inventions for the Home

This category gets a ton of support, especially for items that solve everyday problems. For example, the fly killing salt shotgun and the wet diaper sensor have seen great success!

  • New Tools for Cooking at Home

These are gadgets that will let you do something at home that you normally can’t.  An example is carbonating your own soda.  Another one is  something that lets you cook things faster, or easier.  Items that serve multiple purposes are another option.  Maybe an easy way to make sushi at home?  New kitchen tools for the home are often successful.

Platforms for Reward Based Crowdfunding and Equity Crowdfunding

How do you get started with crowdfunding of any type?  There are a number of platforms out there.  Some are only for offering rewards.  Others allow you to offer equity as well. The most popular are Kickstarter and Indiegogo, but they are not the only players in the game. 

Kickckstarter

With over 14 million backers, Kickstarter is one of the largest crowdfunding platforms in the world.  They boast over 130,000 funded projects. These include products and services related to:

  • Publishing
  • The arts and film
  • Comics and illustration
  • Design and tech

Kickstarter requires you to have a prototype. In addition, projects cannot be for charity.  However, nonprofits can use Kickstarter.  This is one platform that does not allow equity crowdfunding.

Credit Line Hybrid Financing:  Get up to $150,000 in financing so your business can thrive.

Other banned projects and perks include anything to do with:

  • Contests and raffles
  • Cures and medicines
  • Credit services
  • Live animals
  • Alcohol
  • Weapons

Kickstarter will collect a 5% fee on all funds.  They also use a payment processor, Stripe, that applies payment processing fees (roughly 3-5%). Unsuccessful campaigns do not pay a fee. There are also fees of 3% + $0.20 per pledge. Pledges under $10 have to pay a discounted micro pledge fee of 5% + $0.05 per pledge.

Indiegogo

Indiegogo has over 9 million investors. They do not allow campaign goals below $500. Also, they charge 5% platform fees and 3% + 30¢ third-party credit card fees. Note that fees are deducted from the amount raised, not the goal. As a result, if you raise more than your goal, you will pay more in fees. They do not accept PayPal.

Indiegogo is noteworthy because they offer flexible financing in addition to fixed financing options. So, if you do not make your goal and you chose flexible funding, you can at least hold onto what you collected. This is the opposite of how crowdfunding normally works.

RocketHub

RocketHub is better suited for those who need venture capital. They give you an ELEQUITY Funding Room. There, you can pitch your idea and see if it stimulates any interest from donors.

This platform is specifically for business owners working on projects related to:

  • Art
  • Business
  • Science
  • Social

If you achieve your fundraising goal, you will pay a fee of 4%. In addition, you’ll pay a 4% credit card handling fee. But if you do not reach your goal, then that fee jumps up to 8% plus the credit card handling fee. That means RocketHub is best for companies that are more confident they will make their goals.

CircleUp

CircleUp aims to help up and coming brands and companies raise capital for growth projects. However, companies must apply and show revenue of at least $1 million to get a listing on the site. That said, the platform will sometimes make exceptions.

CircleUp can be good for those who already have a somewhat established business. That includes business owners who want both funding and guidance in order to take their businesses to the next level.

If your business gets approval for listing on CircleUp, the fee percentage comes from the total amount you raise.

GoGetFunding

GoGetFunding has been around since 2011. They let fundraisers keep the money they raise, regardless of whether they meet their target. If your business idea is unproven and you are unsure of whether you can meet your funding needs with a crowdfunding for business campaign, flexible funding can be a great option.

They charge a 6.9% fee. This is pretty high, but it includes both the platform fee and the payment processing fee. Therefore, it is actually more cost-effective than many other crowdfunding for business options.

Crowdfunder

With Crowdfunder, investors purchase equity in promising companies. They consider campaigns to be deals, and its donors are investors. Self-start listings are $499/month. Self-start plus is $999/month.  In their community, there are over 15,000 investors and 200,000 startups.

Fundable

This is a crowdfunding for business platform that allows companies to raise funds from investors, customers, and friends. They have over $80 million in funding commitments.

Fundable does allow equity crowdfunding campaigns. Also, they charge $179 per month to raise funds. Fees on rewards are: 3.5% + 30¢ per transaction. They do not charge success fees.

Fundly

Fundly allows for crowdfunding for creative ventures. If your business has a creative lean, this might work for you.

There is no minimum amount to fundraise or to keep money you raise. You can usually withdraw payments within 24 – 48 hours of the donation. In addition, they offer automatic transfers. It is free to create and share an online fundraising campaign.

Yet, Fundly will deduct a 4.9% fee from each donation you get. A credit card processing fee of 3% is also taken out from each donation. Also, there are nonspecific automatic discounts for larger campaigns.

Tips for a Winning Campaign

There is no such thing as guaranteed success.  These steps can help make sure you give yourself the best chance possible when it comes to fundraising through crowdfunding. 

Research

You have to know your market and what demand looks like.  The only way to find that out is to research. Figure out how much money you actually need before you set your goal. Lots of business owners have started crowdfunding campaigns only to find the demand isn’t there or their goal fell short of the actual need.

Make a Prototype

Truly, you have to have a sample to show investors. It’s important. People are almost always more likely to let go of money if they can see something tangible. This is so vital that Kickstarter actually requires you to have a prototype to show potential investors

Think About Which Platform You Should Choose

Once you know who your target audience is, you can determine if you would be best served by Kickstarter, Indiegogo, or another, lesser known platform. If your audience doesn’t use the platform you are on, it won’t matter how great your idea or product is. They’ll never see it.

Credit Line Hybrid Financing:  Get up to $150,000 in financing so your business can thrive.

Give Good Stuff!

This is huge.  Don’t make promises you can’t keep, and don’t give away the company. Still, if someone one is going to help you get started, they deserve something amazing.  Offer more than a thank you note. Be bold with what you offer as a reward for their support, without harming your success.

Goal Setting is a Must

Setting goals you can reach is necessary to success. Make certain you look at the numbers in relation to actual facts before you set a fundraising goal. Be certain you have production facilities on the line that can meet the timeline goals. Do not randomly set goals with no clue what it will take to reach them. 

Marketing Matters

You can’t just throw any old campaign together. If you create a video, it needs to be professionally edited. Any social media should be specifically targeted toward your audience. If they are a techy audience, pull out all the tech stops.  If they are an older crew, they may need less fanfare and a more straightforward approach.  The fact that videos work well reigns pretty much across audience lines however, so definitely consider a video. 

Is Reward Based Crowdfunding for Your Business? 

The answer is, it depends.  It is worth a shot for many businesses, but for sure it should not be counted on as a total funding solution.  There are some campaigns that raise all the money they need, but that is usually the exception rather than the rule.  Most have to explore other funding options as well.  However, you will have a much higher chance of success if you choose the right type of crowdfunding, the right platform, and the perfect marketing plan for your specific business.

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