There was a time when the only place business could go to get a loan was a bank or a credit union. After all, this was one of their main functions and defined one of their roles in the economy. These financial institutions generally loaned money to individuals who were starting a new business.
Among other things, personal credit was important, how much you had of your own money and where it came from, and of course, your business plan. Generally, once you are approved and your business was up and running, you simply had to repay the loan. But if you ran into problems with your businesses’ cash flow the bank was not the place you went.
Odds are, you wouldn’t get a merchant cash advance, particularly if you still owed on your initial loan. This is where capital funding companies come in.
Capital funding companies use their own money to provide micro and small businesses with merchant cash advances to help them through the rough spots. They act as a bridge. For example, Cresthill Capital reviews your receipts and your expenditures to determine if you are running your business responsibly.
When you have a micro or small business your cash receipts should be going back into your business to help it grow. Of course, you have to get paid too, but that is taken into consideration. After all, payroll is an investment in your business. Not many people will work for free. Make sure you review any company you are considering. For example, do an internet search for Cresthill Capital complaints to make sure you like the reviews if this is a company you are considering.
What Happens Next?
A company like Cresthill Capital looks at your books and your business model as well as what your business is. All of these elements are important if they are going to assess the risk you present. It will help them determine what the best terms are for the loan and what appears to be the repayment method that seems to work best for your business.
Banks typically loan you money by determining the amount of capital they are willing to commit, the interest rate based on your credit history and then you are given a fixed payment amount usually due monthly. One of the differences between borrowing from a bank and borrowing from a capital funding company is this.
Capital funding companies offer different types of repayment plans. One of the things that a capital funding firm like Cresthill Capital does require is that you accept credit cards. One reason for this is that they can use the payment processor to repay the loan.
How Does the Payment Processor Get Involved?
Your payment processor knows what your business’ receipts are. They produce reports for you so you can see how much you took in. They also send a file to the bank to settle the receipts and have the funds deposited in your account. They can also ensure that the fees charged by the bank are paid, depending on how you set up your arrangement with the bank and the payment processor.
One way a capital funding firm can get paid is to work with you and the payment processor. You could instruct the payment processor to divert a percentage of your daily receipts to the capital funding agency. This leaves you with one less bill to worry about and you get a daily settlement report showing how much was paid. This method also saves you interest because you are paying the loan back on a daily basis.