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small
BUSINESS
FINANCING
12/01/2017
Fixed fee short-term working capital with daily
repayment is the new name.
Access to short-term money for working capital is critical to small businesses that need to consolidate debt, smooth out cash flow, make necessary purchases of equipment and inventory, expand to keep up with growing demand, or for any reason. Business
Growth Factor™ is a new improved business capital strategy
that was developed
and tested over the last ten years, but 80% of business owners
have not yet taken advantage of it
–or
may not know about it.
By
using your future revenue or receivables and cash sales as assets, you
can qualify your business for up to $500,000 of working capital within
hours.
It is fast, flexible and hassle free.
It is NOT to be confused with an older different product called merchant cash advance in which repayment is via third-party split of a percentage of payment card processing from each credit card batch. This is not recommended in most cases because of separate third party involvement which can cause problems and is expensive.
The
product was created and evolved steadily because banks
stopped making loans under $1 million to small businesses. Traditional
lenders decline 75% of loan applications from small businesses,
and that rejection decision can take weeks. Numerous regulatory and
administrative constraints discourage banks from approving business loans
for less than one million dollars. It
costs a bank the same amount to process a loan application for $10
million as $100,000. And they also see the smaller business loan as inherently
more risky. Banks
are focused on larger businesses and loans over $1M. A
fast flexible capital strategy gives
business owners fast easy access to non-bank financing up to $1 million to quickly solve
problems and seize opportunities within days, not weeks or months.
The
Factor then collected the future value of the invoices when due from the
business’ customers. The Factor's profit reflected the length of time waited
and the risk of possible defaults. However,
that is why – until now – factoring could be used only by businesses
with existing sales already invoiced to other businesses as receivables. All
types of small businesses are realizing that their future revenues are
an asset. NON-BANK
FINANCIAL TECH Today,
a Factor is an institutional investor – not an individual or a bank. The
Factor purchases a discounted dollar value of future sales revenue.
The business owner receives a cash direct deposit in return for repayment terms
auto-debited as
agreed until the contracted future value is
fully paid.
Instead
of a signing a Note for a loan, the business enters into a Receivables
Purchase Agreement with the Factor. The cost of money is
determined by a factor rate, the fixed fee.
A
loan with a low interest rate and a long term can be more expensive than
the same loan with a higher interest rate and a shorter term, and
that’s not counting fees and costs that often are not clearly
disclosed by the lender. A Factor's fixed fee is determined by non-bank financial tech algorithms which typically range from 1.20 to 1.45 depending on a host of data considerations such as revenue strength, industry, creditworthiness, years in business, length of term, etc. There also can be an origination fee deducted from the disbursement. For
example, the business owner might receive $100,000 at a fixed fee of 1.25.
Repayment will be $100,000 x 1.25 with daily payments calculated M-F for
15 months. There
is no cost to apply, no upfront fees, no hidden charges. And the
application has no effect on the business owner’s credit score. Usually, there is a prepayment discount or rebate for early repayment of the balance.. Further,
there is no collateral required and no personal guarantee of repayment if the business defaults.
The business owner may be asked to personally guarantee that all the information
provided is true and correct. Fixed
fee working capital such as Business Growth Factor™ provides easy short-term money within one or two days
for sudden opportunities or emergencies. Flexible terms can be from 6
months to 24 months. Funds can be used for any reason: inventory or
marketing, taxes or unexpected expenses, equipment or seasonal hiring,
expanding the business.
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