What are the most common alternative lending options?
The most common alternative lending products are merchant cash advance, and invoice factoring. While both working capital products provide liquidity quickly, the mechanisms in which funding amounts are determined and approved are different for a variety of reasons.
With merchant cash advance, a company sells a portion of their future sales in exchange for immediate working capital. A business that has at least $10,000 in monthly revenues, can be approved for a merchant cash advance in a matter of hours.
A bank that offers invoice factoring will buy outstanding invoices at a slightly discounted rate to their collectable value. When a factoring company factors a company’s invoices, it provides the working capital within a matter of days for the value of the purchased invoice and collects on the invoice from the customer directly.
Merchant cash advance, sell your future sales for cash today.
Most types of companies can qualify for a merchant cash advance if they have over $10,000 in monthly sales or revenue. A businesses creditworthiness is not strongly considered in the application process as the financing product was designed as an alternative to traditional small business loans, that do heavily consider credit. A company that is approved for a merchant cash advance, is effectively selling their future sales today for instant working capital available for use within hours.
Invoice Factoring, leverage your invoices for working capital.
Certain industries have invoices that recur on a monthly or quarterly basis from highly verified customers. A factoring company will evaluate a business’s sales, as well as the customers they sell too. When approved for invoice factoring, the factoring company will purchase invoices at a slightly discounted rate with a small fee. The factoring company will then deposit the working capital to the business and collect on the invoice directly from your customers.
How to apply for alternative financing?
CFG Merchant Solutions offers a wide range of alternative funding options. Apply via our live chat or one of the forms on our website, and we will get you funded within hours!