One question, answered properly

A checklist for comparing a bank offer against a non-bank offer The two are rarely competing for the same job, and the checklist is mostly about what happens after funding. MCAWorking capital A friends-and-family note or an institutional lender? One lender's remedies are written down and bounded. The other's are social, unbounded, and last longer than the business will. Working capitalTerm loan A funder quoted a total repayment. How do I turn it into a rate? Two inputs, one equation, and a warning about the shortcut everyone reaches for first. MCAWorking capital A lower rate or no prepayment penalty? The rate is a price you pay every day. The penalty is a price on an event that may never happen. Weight the second by how likely the event is. Term loanLine of credit A payoff and a buyout are not the same transaction One ends an obligation. The other moves it into a larger obligation and charges you again on money that was already cost. MCAWorking capital A seller note or a lender for the purchase price? A seller note is financed by the person who knows whether the business can actually pay it. That alignment is the point — and the security they keep is the catch. Term loanSBA An offer arrived before I was ready. Take it or wait? The comparison is not offer versus nothing. It is this offer now against the offer your file would produce in one or two quarters, minus what the wait costs. MCAWorking capital Anti-stacking clauses and what breaching one triggers The clause that makes taking a second advance an event of default on the first, and the filing that makes it easy to discover. MCA Arbitration clauses, and the carve-out that usually sits beside them A private forum, limited discovery, a fee schedule set by the provider's rules, and almost no appeal — often binding on you while the holder keeps the courthouse. MCAWorking capital Are car wash memberships an asset or a liability to a lender? A subscription base is the most valuable thing a wash owns and the least collateralisable. It is also, in accounting terms, partly a liability. Term loanLine of credit Asset purchase or stock purchase: what changes for financing? Lenders prefer assets for reasons that also protect you. The exceptions are licences, leases and contracts that will not move. Term loanSBA Asset-based lending versus factoring for the same receivables One lends against the ledger and leaves you to collect. The other buys specific invoices and collects them itself. The receivables are identical; almost nothing else is. Line of creditInvoice financing Auto-renewal and evergreen clauses in business finance Advances end when they end. Ongoing facilities often roll into another full term unless you give notice inside a window you agreed to at signing. Working capitalLine of credit Bank or non-bank lender for a business under three years old The two are not competing on price for the same file. They are underwriting different things, and which one can say yes depends more on what you can evidence than on what you want. Working capitalTerm loan Business credit card or personal card for business spending? A business card does not put a wall between you and the debt. What it changes is the record, the controls and the rules that apply. Business cards Can I cancel after signing a business funding agreement? Commercial financing generally carries no cooling-off period. What you can do depends almost entirely on whether the money has moved. MCAWorking capital Can I compare a factor rate to an APR? Not directly — one has a time dimension and one does not. Here is what to put side by side instead. MCAWorking capital Can I get funded without tax returns? For a large part of the market, yes. What you are really choosing is which information the price is based on. MCAWorking capital Can I get payroll funding for my staffing agency? Usually yes, and the decision turns mostly on who your clients are rather than on how long you have been trading. Invoice financingPayroll Can a business lender sue me in another state? Your contract's forum clause usually decides it, and two states have written rules that override what the contract says. MCAWorking capital Can a business lender take your house? Two different routes lead there and they work differently. Neither is fast, and both are shaped by state law you can look up. MCAWorking capital Can a business owned by a trust get financing? Usually, and the friction is almost entirely documentary: proving who may act, and finding a human being to guarantee. Term loanLine of credit Can a business with a non-resident owner get funded? For most private funding the obstacle is not the passport. It is identity verification, and whether a guarantee against someone with no US assets is worth anything. MCAWorking capital Can a fishing permit or quota be pledged as collateral? The permit is three quarters of what you are buying and the one part federal law says is not property. The vessel mortgage covers the rest. Working capitalTerm loan Can a funder freeze your business bank account? Generally not without a judgment first. Three other things get mistaken for a freeze, and two of them are more likely than the real one. MCAWorking capital Can a lender take a liquor licence as collateral? Sometimes, partially, and never as simply as taking a truck. The regulator decides who may hold the licence next, and it is not bound by your loan agreement. Working capitalTerm loan Can a nonprofit get working capital financing? Not from the SBA's main loan programmes, which exclude non-profits by regulation. From banks, CDFIs and specialist lenders, yes — against the receivable, not the mission. Working capitalLine of credit Can a software business borrow against recurring revenue? Recurring revenue is lendable and deferred revenue is a liability, and the same annual prepayment creates both at once. Working capitalTerm loan Can a sole proprietor with no entity get business funding? Yes, on almost every product — the entity was never the obstacle. What causes trouble is one bank account doing two jobs. Working capitalTerm loan Can a startup get an SBA loan? The rules allow it and lenders finance new businesses every week. The constraint is lender appetite, a bigger injection, and projections you can defend. Working capitalSBA Can equipment payments start when your season does? Seasonal and deferred payment schedules exist on most equipment finance paper. What they cost is small; what they do to your covenant position is not. Line of creditEquipment Can you be sued in another state over a business loan? Usually yes, because you agreed to it on a page you did not read, and a judgment obtained there can generally be brought home and enforced here. MCAWorking capital Can you borrow against a marketplace payout reserve? The reserve is often the single largest asset on a seller's balance sheet and one of the very few that no funder will advance against. Working capitalInvoice financing Can you borrow against rental equipment that is out on rent? The fleet is collateral wherever it stands, but a unit on a customer site and the rent it earns are two different assets, and only one of them is easy to verify. Working capitalLine of credit Can you borrow against unbilled work in progress? Rarely, and never on good terms. The faster route to the same cash is to stop having so much of it. Working capitalTerm loan Can you borrow while deliberately shrinking the business? Yes, but not from the products that size off deposits — those read the shrinkage and nothing else. The cash-flow lenders will read the improvement. Working capitalTerm loan Can you file bankruptcy on a business loan? A company can file. Whether that touches the debt you personally guaranteed is a separate question with a mostly unwelcome answer. MCAWorking capital Can you finance retainage on a construction contract? Retainage is a receivable that is not yet payable, held by someone who may still have claims against it. Some funders advance against it, most do not, and the rules differ by state and by whether the job is public. Working capitalInvoice financing Can you finance the purchase of a pest control route? Ninety per cent of the price is customer relationships that walk out the door if service slips. Lenders know it, and they underwrite the retention, not the truck. Term loanSBA Can you get a business term loan with two years in business? Two years clears the most common documentation threshold, which changes the question from whether you have history to whether the history supports the payment. Term loan Can you get business funding with a 500 credit score? The score narrows the product set and moves the price. What decides the outcome is the rest of the file, and usually the deposits. MCAWorking capital Can you get business funding with a charge-off on your record? A charge-off is an accounting move by the creditor, not a closed matter. What matters is who charged you off, when, and whether they were a funder. MCAWorking capital Can you get business funding with a judgment against you? The concern is not that you lost a lawsuit. It is that a judgment creditor can restrain the same bank account the funder intends to debit. MCAWorking capital Can you get business funding with a recent bankruptcy? Whether the case is open or discharged changes the question completely, and the law that protects you from discrimination does not reach private lenders. MCAWorking capital Can you get business funding with a tax lien? A filed federal tax lien can outrank a lender's security interest, which is why it stops some deals cold — and why an installment agreement changes the conversation. MCAWorking capital Can you get funded with one month in business? Most of the market underwrites a deposit history that does not exist yet. What remains underwrites your customers, an asset, a platform, or you personally. MCAWorking capital Can you have two SBA loans at once? Yes, and combinations like a 504 for the building and a 7(a) for working capital are routine. The limit is aggregate, and lien position gets negotiated. SBA Can you pay off a business loan early? Almost always yes. Whether it saves you anything depends on one contract term most borrowers never check before signing. Working capitalTerm loan Can you stop the daily payments on an advance? Physically, yes, by three different methods. Contractually, each of them is usually the event that opens the door to everything else. MCAWorking capital Cash-heavy businesses and the deposit problem Bank-statement underwriting can only see money that reached the bank. Revenue that stays in the till is invisible, whatever your books say. MCAWorking capital Citizenship and ownership requirements for an SBA loan The rule is about who owns the business, not who runs it, and it has been tightened recently. Verify the current text before you restructure anything. SBA Contractors or employees: what each does to your cash and your funding file Contractors are cheaper until roughly 1,750 hours a year, and they change how a lender reads your cost base. Working capitalLine of credit Cure periods: only if your contract says so There is no general right to fix a breach before it counts. The number of days, if there is one, is written into the default section. MCAWorking capital Daily versus weekly remittance, and what each does to payroll The frequency does not change what the advance costs. It changes whether you can hold a balance long enough to cover a Tuesday obligation. MCA Do I get a disclosure sheet before I sign business financing? In eleven states, yes, though what is on it and when it arrives varies a great deal. Everywhere else you get whatever you insist on. MCAWorking capital Do I have to give a lender my bank login? There is a real distinction between a read-only data connection and handing over your credentials, and the difference is where your protection lives. MCAWorking capital Do I need a CPA, or will a bookkeeper do? They do different jobs, and the one that decides whether your application stalls is usually the cheaper one. Working capitalTerm loan Do all owners have to sign a personal guarantee? Usually everyone above a stated ownership percentage, and each signature is for the whole obligation rather than for a share of it. MCAWorking capital Do business credit cards affect personal credit? At the application, almost always. After that, it depends on an issuer policy you can look up before you apply. Business cards Do business credit cards build business credit? Only if the issuer furnishes the account to a commercial bureau. Paying perfectly on a card that reports nowhere builds nothing at all. Business cards Do card settlements and direct customer payments count the same? Both are revenue. Only one of them arrives net of a cost the underwriter cannot see, and only one of them can be intercepted at source. MCAWorking capital Do fuel and lottery sales count as revenue for an advance? A store depositing 620,000 a month can be earning 65,000 of gross profit on it. Sizing an advance off the deposits produces a payment the store cannot make. MCAWorking capital Do sales tax and payroll withholding in my account count as revenue? They inflate two figures an underwriter reads and belong to neither. One of them is easy to strip out; the other quietly flatters your balance for weeks at a time. MCAWorking capital Do transfers between your own accounts count as revenue? They appear as deposits and they are not revenue. Underwriters strip them, and the version they miss creates a worse problem than the one they catch. MCAWorking capital Do you need SAM.gov registration before you can be certified? Yes, and the registration itself forces three decisions that determine whether any certification is worth holding. Working capitalSBA Do you need collateral for an SBA loan? You do not need enough collateral to cover the loan. You do need to pledge what you have, and for many borrowers that reaches the house. SBAAsset-based Do you need collateral for business funding? Depends entirely on the product — and "unsecured" in this market usually means no specific asset pledged, not no lien filed. MCAWorking capital Does 8(a) certification help you get a loan? The programme is a procurement door, not a credit line, and the regulation that governs admission assumes you already have the credit. Working capitalLine of credit Does a business default reach your personal credit? Sometimes, through four specific routes. The guarantee alone does not put it there, and the absence of a mark does not mean the absence of exposure. MCAWorking capital Does a business loan show up on your personal credit report? Often not while it is performing, frequently yes if it is not — and the application itself may leave a mark regardless of what happens to the loan. Term loanLine of credit Does a day job help or hurt a business loan application? It helps the arithmetic and raises a question about your attention. Both effects are real, and only one of them is yours to manage. Term loanLine of credit Does a lapsed state registration stop a funding? It is one of the quietest deal-killers there is, because it usually surfaces at closing rather than at application. MCAWorking capital Does a recent change of ownership affect funding? It resets the two things underwriting depends on: whose track record the statements represent, and who is behind the guarantee. MCAWorking capital Does a reverse consolidation hurt my credit? The score is rarely the thing that gets damaged. What gets damaged is your ability to be approved for anything cheaper, and that shows up in places a score does not measure. MCAReverse consolidation Does a single-member LLC protect you from business debt? From trade creditors and tort claimants, often. From the funder you signed a guarantee with, not at all — and the guarantee is standard. MCAWorking capital Does a state or city MWBE certification help you borrow? It changes who can bid on public work in one jurisdiction. No part of it reaches a credit decision, and the concentration it creates can cut the other way. Working capitalLine of credit Does an SBA loan require a personal guarantee? Yes, from every owner above the SBA's threshold, unlimited and unconditional. It outlives the business, and closing the company does not close it. SBA Does an existing merchant cash advance stop you getting funded? Not on its own. What decides it is how much of your daily cash is already committed, and what your current contract says about taking more. MCAWorking capital Does booth rent hurt a salon's funding application? It does not make you less creditworthy. It makes you much smaller on the only page most fast funders read. Working capitalTerm loan Does my business funding broker need to be registered or licensed? In five states, yes, and you can check. In several others they cannot charge you a fee before anything funds. MCAWorking capital Does my state cap the interest rate on a business loan? There is usually a cap in the statute book and usually an exemption that removes it before it reaches you. MCAWorking capital Does paying daily instead of monthly change what the financing costs? The dollars stay the same and the rate does not. More frequent collection returns the money sooner, which is worth something to the funder. MCAWorking capital Does paying off a business loan early save money? On interest-bearing debt, yes, and the saving is calculable. On fixed-total products, usually not a cent. MCATerm loan Does switching business banks reset my funding history? Your trading record survives the move. The document that proves it does not, and for three to six months that distinction is the whole problem. MCAWorking capital Does the SBA charge veterans less for a loan? There is fee relief on certain 7(a) loans, it is set annually rather than permanently, and it is not the same as a lower rate. Term loanSBA Does your industry disqualify you from business funding? Restricted at one funder frequently means specialised at another. The bigger risk is being screened out by an industry code that describes something you do not do. MCAWorking capital EIN or SSN on a business funding application? Usually both, for different purposes. The EIN identifies the business; the SSN identifies whoever is guaranteeing it. MCAWorking capital Early payoff usually saves nothing, and costs more per month You do not owe a shrinking balance with interest attached. You owe a fixed number, and finishing sooner means paying the same cost over less time. MCA Equipment financing for a business under two years old Start-up equipment deals get done. They are structured differently, they cost more, and they depend heavily on what you personally bring to them. Equipment Factoring a single invoice: spot deals versus a whole-ledger facility Spot factoring exists. It is priced for what it is, and the reason a factor prefers your whole ledger is not greed. Working capitalInvoice financing Factoring construction receivables and progress billings It is done, by specialists, and it is harder than factoring a delivered load or an approved timesheet — for reasons built into how construction gets paid. Working capitalInvoice financing Factoring, invoice discounting and asset-based lending compared Three ways to turn receivables into cash. They differ on who owns the invoice, who collects it, and how much of your business the lender looks at. Working capitalLine of credit Field exams and appraisals: who pays, and how often You pay, on a per-day basis plus expenses, and the frequency is written into the agreement with a right for the lender to come more often when it is worried. Invoice financingAsset-based Financing refrigeration: a failed cooler is a revenue event, not a repair The cost of a compressor is the smallest number in the incident. Plan the replacement before the failure and you finance an asset instead of a crisis. Working capitalTerm loan Financing used equipment and private-party purchases Used equipment is financed every day. A private-party sale is harder, and the reason has nothing to do with your credit. Equipment Franchise eligibility for an SBA loan, and what happened to the franchise directory Franchises are financed constantly. The question is whether the franchise agreement gives the franchisor so much control that the SBA treats the two as affiliated. SBA Hell-or-high-water clauses: paying for a machine that does not work Your obligation to pay the lessor is separated from the vendor's obligation to deliver something that functions. That separation is the whole point of the clause. Equipment How a business line of credit and a business credit card differ in practice Both revolve. What separates them is how you get cash out, whether there is a grace period, how the limit is decided, and who is legally on the hook. Line of creditBusiness cards How a business term loan shows up on your balance sheet The loan lands in two places, not one, and the split moves every month — which is what makes your current ratio drift without anything changing. Term loan How a draw is priced, and when interest starts running Usually the day the funds are advanced, on the balance outstanding each day — but the day count, the basis and any draw fee change the answer more than the rate does. Line of credit How a payment processor prices a cash advance off your own volume data They already hold the data, the money and the repayment mechanism, which is why the offer is fast and why there is nothing to negotiate. MCARevenue-based How a private school borrows against a ten-month tuition year The whole year is decided in July. A school that misses enrolment by eight per cent finds out in August and runs out of money in June. Working capitalTerm loan How a self-storage lease-up is financed A new facility produces almost no revenue for a year and full operating costs from month one. The interest reserve is the whole deal. Term loanLine of credit How an advance shows on business credit, and how it does not The balance is often invisible to the bureaus. The public filing, the bank statements and any judgment are not. MCA How business debt affects a contractor's bonding capacity Your surety underwrites working capital and tangible net worth. Some debt improves both. Daily-repayment debt destroys one of them quickly. MCAWorking capital How can I tell a direct funder from a broker? Ask, then verify with three documents that cannot be spun. MCAWorking capital How do I annualise a 2% per 30 days factoring fee? Charge the fee against the cash you were advanced, not the invoice face, then scale it by how many periods fit in a year. Working capitalInvoice financing How do I compare two business loan offers? Reduce both to five numbers you can verify from documents, then check the two things the numbers do not cover. MCAWorking capital How do I dispute something on my business credit report? The consumer playbook does not apply. There is no statutory investigation deadline and no single dispute that reaches all three files. Working capitalTerm loan How do I express a flat fee as a rate? The shorter the term, the more a flat fee is worth. The quick scaling method understates it by about half. Working capitalTerm loan How do I work out the rate behind a monthly payment? Three inputs and one function. The trap is using the loan amount instead of the cash you received. Working capitalTerm loan How do business loan brokers get paid? Four structures, sometimes combined. Only two of them appear anywhere on your paperwork. MCAWorking capital How do you know when your business is finally bankable? Five tests you can run yourself this afternoon, with the arithmetic that tells you how far away you are rather than merely that you are not there. Term loanLine of credit How do you tell whether borrowed marketing money actually worked? Subtract the revenue you would have had anyway, count contribution rather than sales, and include the cost of the money. Working capitalLine of credit How does a divorce affect your business borrowing? Through three mechanisms only: who must sign, what a buyout does to coverage, and whether the ownership is settled enough for anyone to lend against. Working capitalTerm loan How does a lender treat an earnout in an acquisition? As debt service in the year it is payable, unless you structure it so the profit that triggers it also pays it. Term loanSBA How is availability calculated on an asset-based line of credit? Eligible collateral times advance rates, minus reserves, minus what is already outstanding. The arithmetic is simple; the definitions are where the money is. Line of creditAsset-based How long a default follows the business and the owner Through four separate records, each with its own clock. The one that hurts soonest is also the one that clears fastest. MCAWorking capital How long a payoff quote stays good, and what happens after Whatever the letter says — and the per-day figure after that date differs by two orders of magnitude between product types. MCAWorking capital How long an SBA loan takes, and what actually holds it up The honest answer is a stage list, not a number. Two of the stages are entirely in your hands and one is entirely outside everyone's. SBA How long does business loan approval take? The published timeline is a marketing claim unless it is in a commitment letter. What determines the real one is the number of decisions in the process and how complete your file is at submission. Working capitalTerm loan How long does it actually take to build business credit? The honest answer is measured in reporting cycles, and the fastest possible version is still slower than most people are told. Working capitalTerm loan How long does it take a new hire to pay for themselves? Add the recruiting cost and the trainer's lost output to the front of the calculation, and the answer moves by months. Working capitalLine of credit How long does underwriting take? The honest answer is a list of dependencies rather than a number, and the dependencies are knowable in advance. MCAWorking capital How many NSFs and negative days are too many? Nobody credible publishes a market-wide count. What underwriters read is the pattern, the cause, and whether there is any cushion behind the balance. MCAWorking capital How many trade lines do I need before I have a business credit score? Each bureau sets its own minimum and they are not the same. The more useful question is how many you need before the score means anything to a reader. Working capitalTerm loan How much can I borrow against my business revenue? Revenue is where sizing starts and almost never where it ends. Three different constraints are applied, and the binding one is usually cash flow rather than sales. Working capitalTerm loan How much cash do you need between opening a second location and breaking even? Two separate holes — the pre-opening spend and the operating losses during the ramp — and the second one is usually bigger than the first. Working capitalTerm loan How much cash you need at closing to clear two positions Gross facility minus fees minus both payoffs minus per diem. The answer is often negative, and the arithmetic takes four minutes. MCAWorking capital How much does a business loan cost? Interest plus fees, and the two are calculated differently enough that adding them requires care. Working capitalTerm loan How much revenue do you need for business funding? There is no market-wide figure. Each funder's minimum falls out of its own smallest deal size and its own remittance sizing, and most never publish it. MCAWorking capital How quickly factoring actually turns an invoice into cash Two clocks run: the one to get the facility open, and the one from submitting an invoice to money arriving. They are very different lengths. Working capitalInvoice financing How snow contracts change a landscaper's funding profile A seasonal fixed-fee book is contracted revenue in the months you have none. A per-push book is a weather bet with the same historic average. Working capitalLine of credit How the broker gets paid, and why it changes the offer Commission is usually a percentage of what you take, and in many deals the broker can add a margin to the price the funder quoted them. MCA How to calculate the cost of a merchant cash advance Four lines of arithmetic, and the fee line is the one most people leave out. MCAWorking capital How to choose an SBA lender, and the questions that separate them Every SBA lender works from the same rulebook and gets very different results. Delegated authority, deal-type experience and who closes the file explain most of the difference. SBA Interest rate versus APR on a business term loan The interest rate prices the balance. The APR is meant to price the whole deal, and on business credit nobody is forced to agree what that includes. Term loanLine of credit Interim rent: the equipment lease payment nobody warned you about A charge covering the gap between the day the lessor pays for your equipment and the day the lease term officially starts. Equipment Is a 1.4 factor rate high? The question cannot be answered as asked. Supply the term and it answers itself. MCAWorking capital Is a balloon payment better than a fully amortising loan? A balloon lowers the payment by not repaying the principal. The deferred amount comes due on one day, with a lender you do not yet have. Term loanEquipment Is a bigger parts account cheaper than a working capital advance? Supplier credit is the largest and least examined financing line in most repair shops. Whether it is cheap depends entirely on whether you are taking the early-payment discount. MCAWorking capital Is a confession of judgment still legal? It depends on the state, and one state's 2019 change removed the route that had been used against out-of-state owners. MCAWorking capital Is a marketplace submission better than one application? A marketplace turns one form into many submissions. You trade control over who holds your file for coverage across credit boxes you could not find yourself. MCAWorking capital Is a merchant cash advance a loan? Legally it is a purchase of future receivables, and the difference has practical consequences. MCA Is a merchant cash advance legal in my state? No state has banned the product. What differs between states is how much a funder has to tell you first and whether anyone has to be registered. MCAWorking capital Is a volume discount worth borrowing for? Usually yes on the arithmetic, and the arithmetic is not the part that goes wrong. How long the stock sits is. Working capitalLine of credit Is it a bad sign if you need financing to make payroll? It depends entirely on whether the gap is caused by your payment terms or by your margin, and there is a straightforward way to tell which. Working capitalLine of credit Is it cheaper to renew an advance or take a second one? A renewal charges the new factor on money you already owe. A second position charges only on new money, and takes a second debit out of the same account. MCAWorking capital Is it cheaper to stretch suppliers or borrow to pay on time? Trade credit looks free because nobody sends an invoice for it. Where an early-payment discount exists, forgoing it is one of the most expensive borrowings available. Working capitalLine of credit Is revenue-based financing a loan? Sometimes yes, sometimes deliberately not, and the answer is decided by the words in your agreement rather than by the product name on the term sheet. MCARevenue-based Is revenue-based financing cheaper than raising equity? Sometimes, and the comparison is usually made in a way that hides which case you are in. Revenue-based Is vendor dating cheaper than a line of credit? Extended terms from a supplier look free and are not. The comparison is one subtraction, and the break-even is a specific interest rate you can calculate. Working capitalTerm loan Is your cash shortfall a timing problem or a margin problem? One of these is fixed by borrowing. The other is made worse by it, and the arithmetic that tells them apart takes about twenty minutes. Working capitalLine of credit Jurisdiction and venue clauses, and what they cost you The clause that decides whose law applies and where you have to show up — usually chosen by the party that wrote the contract. MCA Jury waivers, class waivers and the carve-out to look for Two clauses that quietly decide who hears your dispute, how much it costs to bring, and whether it can be brought with anyone else. MCA Leasing equipment with bad credit Damaged credit narrows the field and changes the structure rather than closing the door — the collateral does some of the work your score cannot. Equipment Line of credit or term loan for seasonal inventory The asset converts back to cash inside one season. Borrow on something that can be repaid inside one season. Working capitalTerm loan Nobody filed the termination after you paid off Article 9 gives you a written demand, a 20-day clock, a self-help filing right and a statutory penalty, in that order. MCAWorking capital Online banking credentials, and the read-only alternative Underwriting needs to see your statements. It does not need the ability to move your money or change your payees. MCAWorking capital Overtime, a new hire, or a second shift: which is cheaper? There is a crossover point in hours per week. Below it overtime wins, above it the hire wins, and a second shift is a different question entirely. Working capitalLine of credit Owner-occupancy: how much of the building you have to use yourself SBA real estate money is for property your business operates from. Renting out part of it is allowed; buying it to rent out is not. SBA Prepayment penalties on SBA loans: 7(a), 504, and the bank's own terms There is a statutory charge on long-maturity 7(a) loans in the early years, a declining premium on the 504 debenture, and whatever the first-mortgage bank wrote on top. Term loanSBA Purchased amount versus amount funded Two numbers on the first page, a third one that hits your account, and the arithmetic that tells you which offer is cheaper. MCA Reading an offer sheet, and what it leaves out Six numbers have to be on it before it is an offer at all, and four important things are usually somewhere else entirely. MCA Refinancing an expensive short-term product into a term loan Sometimes, and the window is narrower than most owners expect. What decides it is coverage, collateral position and whether the payoff figure is close to what you think you owe. MCAWorking capital Refinancing when a second position is already in place There are three structures available and only one of them is usually offered to you by name. MCAWorking capital Renewals and the rolled balance The unpaid balance from the old deal is usually retired out of the new funding, which means you pay the old cost in full and then buy cost on top of it. MCA SBA loan or conventional bank term loan: how to tell which you want If a bank will do the deal on its own paper, the guarantee is usually costing you money for nothing. The exception is term, and it is a big exception. Term loanSBA Seasonal borrowing done properly The facility should inflate and deflate on the same calendar the business does. A seasonal need funded with a fixed multi-year payment turns one predictable swing into thirty-six months of pressure. Working capitalLine of credit Secured versus unsecured business lines of credit Collateral changes the size, the price, the paperwork and the availability formula — and on a secured line, how much you can draw stops being a fixed number. Line of creditAsset-based Settling or restructuring an advance, and who you actually talk to Sometimes, and the answer depends heavily on which desk currently holds the file — the funder's, a collector's, or a law firm's. MCA Should I borrow against inventory or receivables? A receivable is a claim on a third party with a date attached. Inventory is a bet someone will buy. Lenders advance roughly twice as much against the first. Line of creditInvoice financing Should I buy the building or keep renting? Buying converts rent into a payment plus every cost the landlord used to absorb, and converts liquid working capital into an asset you cannot spend. Term loanSBA Should I finance now or wait and pay cash later? Waiting has a price and it is usually invisible: the margin the asset would have earned in the months you spent saving for it. Term loanEquipment Should I keep a second business bank account? A second account solves three real problems and creates one. Which way it nets out depends entirely on whether revenue touches it. MCAWorking capital Should I lease the machine or rent it for the season? Rental ends when you stop. A lease does not, regardless of whether the machine is working, idle or destroyed. Count the months of actual use and the answer appears. Equipment Should I lend the business my own money or guarantee a loan? Lending puts your cash in today and makes you an unsecured creditor of your own company. Guaranteeing keeps your cash and makes you liable for a bigger number later. Working capitalTerm loan Should I pay down debt or hold the cash? Paying down a time-priced debt is a guaranteed return. Paying down a fixed-cost one returns nothing at all, and the pitch for both is identical. MCATerm loan Should I put money down on equipment or finance all of it? A down payment buys the lender's cushion, and you cannot get that money back without another transaction at a worse price. Term loanEquipment Should I take a bigger amount than I asked for? It depends entirely on whether the extra money is priced per dollar drawn or per dollar committed — and those two structures give opposite answers. MCAWorking capital Should I take the first offer or shop it? Shopping pays when your file is stable and the money has no deadline. It costs when either of those is untrue, and the cost is not the inquiries. MCAWorking capital Should you finance capacity you have not sold yet? Sometimes — when the demand is documented, the payment is coverable from today's business, and the asset can be sold again. Term loanLine of credit Should you fund payroll on a line of credit or a payroll-specific facility? A line of credit is cheaper and more flexible right up until the week it is not available, which is the only week that matters for payroll. Line of creditInvoice financing Should you personally guarantee a second lease when the first one is already guaranteed? Add the two aggregate exposures together before you answer. The combined number is usually several times the business's annual profit. Term loanSBA Should you use a business debt relief company? Not a question anyone should answer for you. What can be answered is which facts decide it, and every one of them is checkable before you sign. MCAWorking capital Should your second location be a separate legal entity? Liability separation is real, but only if you maintain it — and the lender will tie the entities back together anyway. Term loanLine of credit Split funding in a restaurant: the mechanism fits, the margin is the risk Taking a share of each day's card settlement matches how a restaurant actually collects. That is exactly why it is easy to take too much. MCAWorking capital Split funding, lockbox and ACH collection compared Three ways a funder can get its share, ranked by how much control over your own money you keep. MCACard processing Stopping the debit or moving the account: what follows It is the most natural reaction to an unaffordable debit and the one that hands the funder every remedy in the contract at once. MCA Taking an MCA while an SBA loan is pending The two products are weeks apart on speed and an order of magnitude apart on cost. Worse, taking one can kill the other before it closes. MCAWorking capital Temporary reduction or term extension: which to ask for The shape of the shortfall decides it. A trough with an end date takes one, a permanently oversized payment takes the other, and asking for the wrong one wastes your one good approach. MCAWorking capital The SBA guaranty fee, and who ends up paying it The lender owes the fee to the SBA. It is allowed to pass the upfront one to you, and there is a second fee it is not allowed to pass on. SBA The UCC filing a factor puts on your receivables A public notice that someone has an interest in your accounts. It is routine, it is searchable, and it decides who gets paid first. Invoice financingAsset-based The UCC-1 filing behind an advance, and how to get it released A public record at the Secretary of State that other underwriters read before they read anything you tell them. MCAAsset-based The clean-up period on a business line of credit, and why lenders require it A requirement to sit at a zero balance for a stretch each year. It exists to prove the line is financing timing rather than quietly funding a permanent shortfall. Line of credit The credit score you need for equipment financing There is no single cut-off, and any article giving you one is guessing. What exists is a set of thresholds each funder sets privately. Equipment The integration clause, and the promise that is not in the document A clause near the end says the written agreement is the whole agreement. It is there specifically to make earlier conversations irrelevant. MCAWorking capital The maximum SBA loan amount, and the limit that binds first Each program has a statutory ceiling, and almost nobody is stopped by it. Aggregate exposure, cash flow and the lender's own limits bind long before the cap does. SBA The notice of assignment, and why paying the wrong party costs your customer twice One letter that redirects payment, changes who your customer is legally obliged to pay, and cannot be ignored by their accounts payable team. Invoice financing The validity guarantee you sign in a factoring agreement It is not a guarantee that your customer will pay. It is a personal promise that the invoices are real and that you will not interfere with them. Invoice financing The validity guarantee, and why it survives a “no PG” deal A narrow personal promise about truth and diversion rather than about repayment — and the one most likely to still be there when a broker says there is no guarantee. MCA Titled equipment: why a truck is financed differently from a CNC machine One asset has a certificate of title issued by a state. The other has a serial number and a UCC filing. Almost every practical difference follows from that. Equipment Using a line of credit for payroll, and why it can be a warning sign Bridging one payroll against a receivable that has a date on it is ordinary treasury management. Doing it every cycle is a different fact, and lenders read it that way. Working capitalLine of credit Using an SBA loan to buy a business Acquisition is one of the programs' main uses. The underwriting is a different exercise from a working capital request, and it moves on the seller's numbers as much as yours. Term loanSBA Verification calls: what your factor asks your customer A short confirmation that the invoice is real and undisputed. How it is done matters more to your relationships than the fact that it happens. Invoice financing What a UCC filing does, and how to get one removed The filing is a public notice, not the right itself. Removing it takes a specific document from the secured party, and they usually need chasing. MCAWorking capital What a buyer's lender requires when the seller has debt Clean title to the collateral at closing, proved by searches and terminations rather than by anybody's word for it. MCAWorking capital What a delayed liquor licence transfer does to your financing In most states you cannot own the licence until the regulator says so, which means the buyer funds the purchase before acquiring the thing that carries most of the value. Working capitalTerm loan What a future underwriter can actually find about a past default Five record sets, each with a different half-life, and the one with the shortest memory is the one most people worry about most. MCAWorking capital What a lender means when they offer to consolidate your business debt Two very different transactions travel under the same word. One replaces your debts with a single cheaper obligation. The other adds a new obligation on top and lowers the daily number. MCAWorking capital What a modification agreement changes, and what it costs On a fixed-repayment advance an extension usually costs only a fee. On an interest-bearing loan the same extension costs interest, and the difference runs into thousands. MCAWorking capital What a payoff quote includes that the balance does not Six categories of item sit between the number on your statement and the number you have to wire, and only two of them are usually negotiable. MCAWorking capital What actually moves first when you are trying to become fundable? Ranked by how much each input changes within ninety days, which is not the order most advice puts them in. MCAWorking capital What an advance underwriter actually looks at Not your business plan and usually not your financial statements. Your bank statements, read line by line for how money moves. MCA What an equipment funder does when you stop paying Acceleration, repossession, sale, then a bill for the shortfall. The last step is the one people do not see coming. Equipment What are ineligibles in a borrowing base? The collateral you own, that the lender will not count, because collecting it depends on something other than your customer paying. Line of creditInvoice financing What average monthly deposits means to an underwriter, and how they compute it Not the total credits line. A figure built by stripping out everything that is not revenue, then averaged over a window the funder chooses. MCAWorking capital What can't I fix before I apply, and how do I plan around it? Five inputs are fixed on the day you submit. Knowing which ones stops you spending a quarter on something that was never going to move. MCAWorking capital What changes when the platform that processes your sales offers you funding The underwriting gets easier and the negotiation gets harder, because the same counterparty now holds your money, your customers and your debt. MCARevenue-based What changes when you go from unsecured to secured borrowing Pledging assets usually buys size and price. It costs flexibility, adds reporting, and changes what happens if the business fails — in ways worth understanding before you sign, not after. Term loanLine of credit What changes when your second location is in another state? Registration, payroll, tax and insurance all fork. The lending mechanics mostly do not, and the ones that do are not the ones people expect. Term loanLine of credit What client concentration does to a staffing facility The client that got you to scale is the one that caps your availability, and the rule that does the damage is not the one most owners read. Working capitalInvoice financing What collateral does a veterinary practice actually have? Clients pay at the desk, so there is no receivable. On a 1,400,000 purchase the hard collateral covers about a ninth of it, and the rest is cash flow and a signature. Term loanLine of credit What counts as a good interest rate on a business loan? A rate is good when the money it buys earns more than it costs and the payment fits. Those are two different tests, and neither is a number you can look up. Working capitalTerm loan What credit score do you need for a business line of credit? There are at least three scores in play, most lenders do not publish a cut-off, and on a line of credit the score is rarely the thing that decides the file. Line of credit What credit score do you need for business funding? Among the lenders in this directory that publish a minimum at all, the published floors run from 500 to 700. MCAWorking capital What credit score you need for an SBA loan There is no published SBA minimum for most loans. There is a screening score for smaller 7(a) requests, and there is whatever the lender privately requires. SBA What deferred membership revenue does to a gym's loan application It is cash in the bank and a liability on the balance sheet at the same time, and which one a lender looks at decides your outcome. MCAWorking capital What disqualifies you from an SBA loan Some things are eligibility rules with no workaround. Others are credit judgments a different lender might make differently. Knowing which is which saves months. SBA What do ACH and NSF fees add to the cost of financing? They are a cost of the collection method rather than of the money, and the number of payment events decides how big they get. MCAWorking capital What documents do I need for a business loan? The answer depends entirely on which end of the market you are applying at, and the gap between the two ends is enormous. MCAWorking capital What does 20% APR mean on a business loan? It is a price per year on the balance you still owe, not a percentage of what you borrowed. Working capitalTerm loan What does WOSB certification actually get you? Access to a narrower bidding pool in designated industries, and nothing at all from a lender — with an economic-disadvantage test most owners misread. Working capitalSBA What does a daily debit actually take out of my month? Multiply by banking days, not by 30. The answer changes month to month, and so does your ability to pay it. MCAWorking capital What does it mean for a seller note to be on full standby? No payments, no acceleration, no enforcement — and, if the interest accrues and compounds, a balloon much larger than the note. Term loanSBA What does paying off an account do to my business credit file? Paying it off helps. Closing it afterwards can make the file worse, and the arithmetic showing why is short. Working capitalTerm loan What factoring does to your customer relationships Usually less than owners fear, and more than factors admit. The variable is how the factor behaves on the phone, not the fact of factoring. Invoice financing What happens at an SBA loan closing, and which costs are capped Closing is a conditions checklist, not a ceremony. The fees split into lender charges, which are restricted, and third-party costs, which are not. SBA What happens if I run personal expenses through the business account? Three separate consequences arrive on three different timetables, and the funding one shows up long before the tax one. Working capitalTerm loan What happens if you default on a merchant cash advance The remedies section lists what becomes permitted. Which of it is used is a commercial decision, and it varies more than either optimism or dread suggests. MCAWorking capital What happens to an advance when card volume collapses Whether the remittance falls with your sales depends entirely on how the funder collects, and in most deals it does not fall on its own. MCACard processing What happens to my application after I submit it online? It depends entirely on whether you applied to a lender or to something that collects applications, and the two look identical from the outside. MCAWorking capital What happens when inventory you financed does not sell? The payment does not care. What differs by product is how fast the problem reaches the lender and what they can do about it. Working capitalTerm loan What has to be in writing when a funder changes your terms Nine elements, and the most commonly missing one is what happens on the day the arrangement ends. MCAWorking capital What is a 4506-C and what am I agreeing to? It is the instrument a lender uses to get your tax records from the IRS rather than from you. Term loanLine of credit What is a blanket lien on a business? A single security interest covering substantially everything the business owns, including assets you have not bought yet — and the reason your next lender may decline before reading your financials. Term loanLine of credit What is a borrowing base? The formula that turns your collateral into a credit limit, recalculated every time you report. Line of creditInvoice financing What is a conditional approval, and why is it not an approval? It means an underwriter likes the file subject to things that have not happened yet. Several of them involve people who have never heard of you. MCAWorking capital What is a corporate resolution to borrow, and who has to sign it? A short document establishing that the person signing your loan documents is allowed to bind the company. It matters most in the businesses that assume it does not. Term loanLine of credit What is a factor rate, and what does one actually cost? A multiplier applied to the amount advanced, with no time in it anywhere. MCAWorking capital What is a holdback, and how does it decide your term? The percentage of your daily takings a funder keeps until the agreed total is collected. It sets the term, and your sales set the holdback. MCARevenue-based What is a landlord waiver, and why is my lender asking for one? A signature from someone who is not in your deal, does not benefit from it, and can hold your closing date for a fortnight. Term loanLine of credit What is a merchant reserve? Money you earned that your processor keeps, against refunds and chargebacks it thinks may be coming. Card processing What is a soft credit pull, and when does it become a hard one? An inquiry other lenders cannot see and your score does not feel — which is useful, and is also not the same thing as an offer. MCAWorking capital What is a stip, and how do I clear one without restarting the file? A condition attached to an approval. Clearing them is straightforward; the way people lose deals is by clearing them one at a time over three weeks. MCAWorking capital What is actually negotiable on a business funding offer? The headline price moves less than people hope. Five other things move more, and two of them change the cost as much as the rate would. MCAWorking capital What is an ISO, and how is it different from a funder or a lender? Four words get used interchangeably by people who know exactly how they differ. Here is who is who, and whose money is at risk. MCAWorking capital What is interchange? The largest part of your card acceptance cost, set by the card networks, paid to your customer's bank, and not your processor's to keep. Card processing What to do instead of a reverse consolidation Most of the useful options start with a phone call you have been avoiding, and none of them cost anything to explore. MCAInvoice financing What “no interest” actually means in an advance pitch It is accurate as a description of the paperwork and useless as a description of the price. Here is how to move the conversation back to money. MCA When a factored invoice goes unpaid In a recourse facility it comes straight back to you, and the money comes out of the funding you were expecting this week. Invoice financing When a reconciliation request is refused or ignored Build the record first. What that record is worth depends on how the clause was drafted, and that is a question for a lawyer in your state. MCAWorking capital When an SBA loan is not worth the paperwork The program is genuinely good for some deals. For others you are spending forty hours and a home lien to save less than the process costs you. Term loanLine of credit When an SBA loan requires life insurance on the owner It is required where the business would not survive losing you. For a one-owner business, assume yes, and start the application early. SBA When does a business stop needing the owner's personal credit? Later than most people expect, and in stages rather than all at once. The personal guarantee is usually the last thing to go, if it goes at all. Working capitalTerm loan When it is worth paying a lawyer about business debt Six situations where an hour of advice is cheap, and one where it is the only thing that helps. MCAWorking capital When one funder agrees and the other refuses The relief you won gets consumed by the creditor who said no, unless you built the condition in before you asked. MCAWorking capital When should I stop improving my file and just apply? There is a point where another quarter of preparation buys less than the delay costs. It is identifiable, and it is earlier than perfectionists think. MCAWorking capital When the daily debit is more than the business earns The order you do things in matters more than any single step, because two of the obvious moves are enumerated events of default. MCA When your funding is sold to someone else The contract does not change because the owner of it did. What changes is who you deal with, where notices go, and how flexible the holder is. MCAWorking capital Where to report a funder or broker, and what each channel does No agency will collect your money back for you. Reports are how patterns become visible, and they take about fifteen minutes. MCAWorking capital Whether invoice factoring counts as a loan Legally it is a sale of an asset. Commercially it behaves like borrowing against that asset, and the agreement usually contains the parts you would expect from a loan. Working capitalInvoice financing Whether the personal guarantee survives closing the business Generally yes, and the reason is structural: the guarantee is a separate contract, and most are drafted so the borrower's disappearance is the event they were written for. MCAWorking capital Whether your equipment lease payments are deductible On a true lease the payment is rent and you deduct it. On a lease that is really a purchase, you deduct interest and depreciation instead — and the total is not the same shape. Term loanEquipment Which bank accounts do you have to submit? The operating account, and any other account revenue passes through. Choosing the tidy one and omitting the busy one is the version that goes wrong. MCAWorking capital Which clauses should I read twice before signing? Ten provisions decide what happens when something goes wrong. They are all in the second half of the document, where attention has run out. MCAWorking capital Which net-30 vendor accounts actually report to business credit? No supplier is obliged to report anything. The only reliable way to know is to ask in writing and then check whether the line appeared. Term loanLine of credit Which position to pay off first Divide the daily remittance by the remaining balance. The highest number is usually the answer, and there are three situations where it is not. MCAWorking capital Who funds working capital when you buy a business? In most asset purchases, you do — and the number is frequently larger than the down payment. Working capitalTerm loan Who pays the broker's points on a funding deal? You do, whether or not it appears on your term sheet. The question is only which mechanism was used. MCAWorking capital Why a merchant cash advance has no APR of its own An APR needs a term. A purchase of receivables collected as a share of sales does not have one until the sales happen. MCAWorking capital Why a switch to booth rent shrinks your funding offer The conversion can leave you with more cash and a smaller offer at the same time, because the number being underwritten is deposits, not profit. MCAWorking capital Why an advance has no APR until you fix a term An APR needs a time dimension. The contract deliberately has none, which is why you have to supply one and say what you supplied. MCARevenue-based Why did my business line of credit get cut? Start by finding out which of four things happened, because the response to a borrowing base recalculation is nothing like the response to a covenant breach. Line of creditAsset-based Why did the offer change between the term sheet and the contract? Sometimes because something in the file changed. Sometimes because the term sheet was never a promise. Telling the two apart is the whole task. MCAWorking capital Why do lenders want my bank statements? Because it is the only document in the file you did not prepare, and because for a large part of this market it is not supporting evidence — it is the underwriting. MCAWorking capital Why does a funder want a voided cheque and my driver's licence? The small documents each answer one specific question, and each of them stops a file on its own when it is missing or unreadable. MCAWorking capital Why factoring is the default working capital product in trucking Not habit, and not a lack of alternatives. Freight receivables have four properties that make them the easiest small-business asset in America to buy. Working capitalLine of credit Why is my processing rate higher than what I was quoted? Usually because the quote described one part of the bill and the statement describes all of it. The gap is measurable in about ten minutes. Card processing Why medical receivables financing is its own product Ordinary factoring buys a stated amount owed by a customer. A medical funder buys an estimate of what a payer will eventually allow, and prices the difference. Working capitalLine of credit Why repair shops get constant funding calls Steady card volume, a public paper trail and a resale market for leads. None of it is a judgement about your business. MCAWorking capital Why the cheapest-looking quote often has the most fees outside it Because the headline number is the one being shopped, and everything moved out of it is not. MCAWorking capital Will a business funder check your personal credit? For anything with a personal guarantee on it, assume yes. The useful questions are when, how, and what the authorisation you signed actually permits. MCAWorking capital Will a lender call my bank, my landlord or my customers? Verification is routine and mostly harmless. The one that can surprise you is the call to a customer, and you should know in advance whether it is coming. MCALine of credit With no revenue yet, what is there to lend against? Four things, none of them the business itself: an asset, an order, your personal balance sheet, and a projection somebody else is willing to guarantee. Term loanSBA You have a purchase order you cannot fund. What are the options? Six routes, one margin test that rules most of them out, and the three risks that decide whether the order is worth taking at all. Working capitalLine of credit Your silent partner will not sign a guarantee Sometimes, and the answer turns on a percentage, a regulation, and whether the lender thinks the partner can walk away with the business. Term loanLine of credit