All posts tagged: merchant cash advance

Post-Hurricane Business Survival Loans

September 15, 2017 Tiffani

Greetings to you all!

As our region was just pummeled by one of the strongest storms in Florida history, we – at Global Business Lending– have recovered and our South Florida office has been restored to full power.

Ain’t no mountain high enough.

Ain’t no valley low enough.

Ain’t no river wide enough.

Can keep us from funding your business.

But, seriously, as a Florida-based business, we too know the struggle of our business being out of commission for days – whether it be due to power loss (like ourselves), closed roads because of fallen trees, building or equipment damage, gas shortage or employees unable to make it to work.

We are Florida. Yet, we are #FloridaStrong. Thus, Global Business Lending remains committed to our mantra – we are the true advocates for the small business owner. Subsequently, we would like to assist as many businesses who have been victims of Hurricane Harvey in the Houston, Texas area and Hurricane Irma in Florida in securing working capital this season.

Here are 3 ideas for you to obtain fast capital that should help out during this tough period in business:

Have a Set Plan on How you Can Grow Quickly in 0-4 Months

We specialize in fast funding and we can secure emergency funds for your business within 48 hours of your request. The only catch is these funds must be used for things that will bring an immediate return on your investment. This is short-term financing which you must see as jump-start capital for your post-hurricane needs. Here are some examples. Fix a piece of equipment that was damaged due to flying debris. Fix a leaky roof in your restaurant so you can re-open in a few days. Hire or enable your human resources to manage an overflow of business due to the hurricane aftermath. Whatever it is, ensure you have a clear, set plan to use these funds. This way, our investors are encouraged to lend you the funds you need as quickly as you need them.

Demonstrate Strong Revenue Before the Hurricane

Whether your business may have had to shut its doors several days before the hurricane and/or several days after the hurricane, we definitely know your current revenue has been impacted by the storm.

Still, in order to be pre-approved for alternative loans like the ones we offer, your business must demonstrate a minimum of $6,000 in deposits monthly (at least for the last three months), very few negative days and a stable average daily balance in your business checking account. This may be hard to do since the storm because your clients haven’t paid you, your store had to remain shut, or you had to dip into your bank account more than usual to pay for unforeseen expenses.

If this is the case, we can still help you if you can 1) demonstrate consistent revenue in the months prior to the storm (whether that be 3-6 months before or even this time last year), 2) keep your current daily bank balance at least over $500 or 3) do anything to demonstrate income for the current month even if you have to make cash deposits yourself into your business bank account. Do these things and we will work hard on your side to get an investor interested in funding your business quickly.

Be Okay With a Starter Offer

For some of you mid-sized businesses, we would genuinely love to offer you large amounts of capital to get you through this rough patch. However, as sad as it is to say, our investors and partners view hurricane victims as very high lending risks at this time. Therefore, in this lending environment, they just aren’t doling out cash to Houston and Florida businesses as they were in months past. Some are even shutting their doors on you.

Still, we know your potential to bounce back because we’re in the same boat (forgive the pun ;-). And, because of that, we won’t stop fighting on your behalf as long as you meet us half way.

Every Houston business owner, every Florida business owner, it is our commitment to still get you an offer – BUT are you willing to accept a lower-than-average offer JUST FOR NOW?

Our advice: Take what you can get now. And, once you get over this hump, we will work hard to renew your loan a few months from now for something much larger. This way, at the very least, you’ve got your emergency funds now so you can keep trucking along like Hurricane Harvey or Irma never happened.

Bottom-line. We’re on your side. Let us help you help yourselves!

VCs and Crowdfunding Run Out of Gas in 2017

April 25, 2017 Tiffani

Last August, we posted a blog entry about the 3 Top Alternative Lending Sources for Small Businesses in 2016. However, a great deal has happened in the alternative lending space within the year which has knocked two of our top sources from their ranks…

In our blog post last year, we named venture capitalists and crowdfunding as two of the leading sources of alternative funding for small businesses. Just so you know. The rationale for using alternative funding sources such as these is that instead of applying for funding with banks – which have become far more discriminating since the recession in 2008 – a new small business with a clear business model can receive quick working capital without having to jump through hoops for a bank’s underwriter.

Now, in 2017, here’s why venture capitalists and crowdfunding are floundering within the alternative lending space.

Venture Capitalists Are Pickier Than Ever

While many caught the Shark Tank bug within the past decade, small businesses were eager to pitch their “next big” idea, invention, product or service to venture capitalists like billionaire tycoon Mark Cuban or Canadian Mr. Wonderful Kevin O’Leary. Yep! But, if you didn’t get picked up a VC in the past year, then it doesn’t look good for you right now.

According to an April 24 article in Pymnts.com, “in 2014 and 2015, mutual funds, hedge funds and other investors dropped billions into companies that these days seem a little too quirky to ever get to an IPO or buyout.”

Sadly, as of 2017, investors have shown more interest in a business that they can predict will make money going forward. As a result, the stats are in — investment in U.S. tech startups plummeted by 30 percent in dollar terms last year from a year earlier.

“It’s not that no one is getting funding — it’s just that everyone is no longer getting funding,” the article stated.

What great about venture capitalists is that they can flood a new company with millions for a stake in said company’s future earnings. However, what if the business never earns? The VC loses his/her shirt.

“There’s going to be a shakeout” for companies that can’t show a profit, said James Beriker, the chief executive of meal-delivery service Munchery.

And, what if the equity ask is too much of a sacrifice for the business owner? Working with a VC can be a raw deal for a new entrepreneur.

2. Crowdfunding Is a Hassle for the Small Investor

Crowdfunding uses a website and an email campaign to persuade individuals to each give a small business donation, either for the joy of seeing the business take off or for a profit share in the business.

Last May, Title III of the JOBS Act went into effect, making it legal for anyone to invest in a private company, opening up investing in willing startups to any American, according to Fast Company.

Over 600 crowdfunding websites like Indiegogo and The Lending Club cropped up to make the dreams of millions of aspiring entrepreneurs come to life around the world.

Mark Lynn is the co-founder of L.A. apparel brand startup DSTLD who raised $1.75 million from 1,698 investors through equity crowdfunding on SeedInvest.

Individuals could invest in DSTLD for upwards of $500, with the largest being $50,000, so Lynn viewed it as a viable alternative to venture capital fundraising.

“Let’s be clear, it’s not an easier way to raise money. It’s just a different way to raise money,” he told Fast Company.

It’s not easier, Lynn said, because like any fundraising, it involves many man hours in marketing the company, interfacing with potential investors, and filling out paperwork to meet regulations. In fact, companies looking to raise more than $500,000 must undergo a financial audit by an independent third party.

Payment methods were also very limited. DSTLD and SeedInvest signed on with FirstData, a credit card processing and payments company, to accept their first batch of investments on the site. However, FirstData froze the transactions.

“They had never seen anything like that before, transactions for an equity crowdfunding site. So we were in limbo for a month because we couldn’t process the payments,” Lynn said.

For a community of small investors, they don’t want their payments being held for a whole month. They don’t have the money to spare.

3. Why Merchant Cash Advance is the Answer

The industry of merchant cash advance has been around since the 1980s but truly took off during the last decade due to the recession in the United States. Small businesses who need loans can receive funds as low as $2,000 and as high as $3 million.

A business can be approved for a merchant cash advance at firms like Global Business Lending with the following minimum requirements:

Having been in business for at least 3 months
Having at least $6,000 in regular gross monthly deposits
Having an active U.S.-based business checking account
Having a clear vision and purpose for the funds to prove an investor will be paid back within the given term

The ironic thing about the switch in the lending environment is that MCA’s investors are the same hedge funds and private lenders who backed tech startups as VCs. Today, however, they are using their money to back the programs offered by merchant cash advance companies. The difference is that they don’t want equity. They want a shorter payback term.

It mitigates the risk for them because the pressure is on the new business to perform. No pipe dreams. No pie-in-the-sky business models. No top-heavy staff. Nice and lean operations are what business owners are encouraged to do with an MCA investment.

Last big difference: QUICK TURNAROUND.

While it might take months for a VC to make up their minds about your pitch or 60 days for a crowd to send in their donations, with an MCA, your business can be funded in as much as 5 days or in as little as 48 hours. It all depends on a business owner’s readiness and cooperation with an MCA underwriter who is train to work at lightning speeds.

Microlending: Is That Like a Merchant Cash Advance?

April 18, 2017 Tiffani

When you think microloan, you may think of funding a small shoe store in Kampala, Uganda or a grocery store in Phnom Penh, Cambodia?

And, while that may be true, you may not realize that small businesses in the U.S. and Canada can qualify for something very similar. It’s called a merchant cash advance.

Top 3 Alternative Lending Sources for Small Businesses in 2016

August 22, 2016 Tiffani

Since 2008, banks have made it even more stringent for merchants to qualify for small business loans. As such, there are very few sources for small businesses to turn to for quick working capital without having to jump through major hoops to qualify. Quite frankly, banks perform rigorous financial review (profit & loss sheet, detailed business plan, 2 years of tax returns, business owner’s blood type, first-born child’s dental records and food allergies…okay maybe not the last three) that would turn off and/or disqualify businesses that are both viable and income-producing.

But, guess what, it’s 2016, baby! Henry Fernandez doesn’t need to wait on a bank loan to grow his Italian ice shop neither does Janice Kennedy when she wants to put a new wing on her Irish pub or Leon Baptiste when he needs equipment for a new construction job. In fact, no proprietor has to wait on a bank loan anymore to grow, expand or, even, start his/her own business.

Here are the 3 top alternative funding sources for any business in 2016.

VENTURE CAPITALISTS

Seeking funds from venture capitalists is a good source for growing businesses in the new millennium. You’ve all seen ABC’s Shark Tank, right? Where a bunch of millionaire and billionaire business tycoons listen to pitches made by aspiring and current entrepreneurs then decide if they’d like to get in bed with the guy selling the latest toilet tissue dispenser or the world’s first self-tying sneaker.

Here’s the catch: venture capitalists are looking for ownership stake in the business and they seek to deploy hundreds of thousands or millions of dollars, not small investments, because they are seeking multiple times return on that capital. Thus, venture capitalists focus heavily on the size of the market: if they don’t believe the market is large enough, they won’t invest.

Additionally, securing financing from venture capitalists is kind of like dating; the VC needs time to warm up to you. So, VCs want to get to know you – the founder. They want to watch you execute and make progress before committing to invest in your idea, invention or company.

MERCHANT CASH ADVANCE LENDERS

The merchant cash advance industry has become popular in the past decade as it is known for underwriting high-risk loans – loans that banks wouldn’t touch with a ten-foot pole.

Companies like On Deck Capital and Merchant Cash & Capital in New York or Global Business Lending in Ft. Lauderdale, Florida qualify businesses without a credit check. Instead, they use more common-sense guidelines to ensure that the business they lend to is financially healthy enough to pay back a short-term loan.

They must prove things like having a monthly bank balance of $6,000, having been in business for 3 months and not be in an open bankruptcy.

The funds that these companies provide are technically not loans; the correct term is a merchant cash advance, which is a short-term advance of funds against a business’s future receivables. According to Entrepreneur.com, this 15-year-old industry is “booming, mainly because bank lending criteria have become so tight since the Great Recession that very few small businesses are able to qualify for bank loans.”

Businesses like restaurants, retail shops, contractors and service companies generally find these funds helpful because most times they need lump sums to purchase supplies, equipment or to expand their space. They can qualify for $2,000 to $3 million.

CROWDFUNDING WEBSITES

Crowdfunding has also grown in popularity due to the very reason that merchant cash advance firms did — a lack of lending appetite from the major banks.

Crowdfunding uses a website and email campaign to persuade individuals to each give a business a small donation — $10, $50, $100, maybe more — within a fixed term. It has all become possible in recent years thanks to a proliferation of websites that allow nonprofits, artists, musicians and businesses to raise money. There are more than 600 crowdfunding platforms around the world with fundraising reaching billions of dollars annually, according to the research firm Massolution. The most common are Kickstarter, Indiegogo and The Lending Club.

If you are going to use a crowdfunding platform, you must have an engaging story to tell so that audiences can almost immediately attach value to your product or service. A business owner initially sources individuals from within his/her own network of friends, sending out correspondence through their email’s address book. The key is to gain interest from friends of friends or strangers, so that your network doesn’t exhaust quickly.

Here’s the tricky part: a business can raise thousands at the end of such a campaign, but most times can only keep the money they raised if their total funding goal is met. Also, be careful, a business risks getting sued if it promises customers products or perks in return for donations, and then fails to deliver.

The Pains and Perks of Business Lending

July 21, 2016 Tiffani

The world of banking has changed dramatically, if not radically, in the years since September 2008 when Lehman Brothers went bust. The mortgage crisis ensued and then WHAMMO … banks decided to make borrowing from them a HUGE PAIN. Here is an in depth infographic explaining the differences between traditional and alternative business lending.