MCA Funding

Pros and Cons of an MCA

Needing fast cash is an unfortunate problem for a lot of small businesses. Before signing up for a merchant cash advance with a lender, going over the pros and cons will give you a better idea of what you’re in for.

Pros

The biggest benefit of an MCA is quickly getting the money in hand that you need for your business. If you have a project or an improvement that you want to make in your small business and need money to make it happen, a merchant cash advance can be a way to acquire the money needed to do so.

Unlike a loan, you don’t need to have collateral to back up the loan. You also don’t need to worry too much about your credit score. And although the lender will pull your credit score, MCAs tend to be more forgiving for businesses with mediocre or bad credit.

A lender will be able to give you more flexible payment options as well. If you’re going through a slow sales period, you could readjust the daily holdback of your transactions as well.

Cons

Since there is a factor added to the payback amount for a merchant cash advance, if you’re in a period of lower sales, the higher payback amount could be untimely. The extra cost of paying back the merchant cash advance may diminsh profitability to some degree.

Since MCAs aren’t regulated, the factor on top of the payback account tends to be higher than the interest of a traditional bank loan. The payback period will generally be shorter than a loan.

Who an MCA Is Best For

A merchant cash advance is best for a small business that needs some extra money to get its business to be more competitive and generally more functional. Not all small businesses can get bank loans to do all of the things they want to do. A merchant cash advance can also assist with cash flow to pay and consolidate debt.

An MCA is not great for a business that had a major disaster that completely shut down business operations. Looking for assistance in the form of a traditional bank loan or a grant will be better than an MCA because they don’t expect you to continue daily transactions in order to pay them back. The MCA is a good idea for a small business that wants to make non-interrupting upgrades.

Alternatives to MCAs

If your business doesn’t qualify for an MCA for any reason, you still have options available to you. One alternative is a high-risk merchant account, which is popular with companies that aren’t able to secure financing through traditional means. At Capital Biz Solutions, we have access to multiple MCA lenders. We always negotiate better terms for our clients; as we deal directly with underwriters through our advisory staff. You may have stacked MCAs that we can refinance into one loan for a much better payment. We want to ensure that an MCA is the proper lending facility at the time of your application. If it is not, we will recommend other types of loan facilities that we believe are a better solution. We ask that you take advantage of our 60 and 90-minute consultations at no cost. Please visit us on the web at https://www.capitalbizsolutions.com/ or simply call us at 508 864 7758. We look forward to assisting you grow your business now, and in the future.

The Importance of Working Capital Finance for Businesses

Whether your business is facing cash flow issues or not, having extra cash in reserves is always good to secure yourself during unexpected circumstances. Working capital financing lets firms fulfill their short-term or urgent cash flow shortfalls.

Benefits of Working Capital Financing

This financing option is beneficial for different business types and purposes. Below are the key benefits of working capital financing:

Cover Expenditure Gaps

Working capital financing helps keep a business afloat by financing its payment gaps and fulfilling its working capital requirement. Small and growing businesses solely relying on accounts payables to fuel their working capital can support their everyday operations without the need for an equity transaction.

Zero Collateral Requirement

Firms with good credit ratings are granted unsecured working capital finance. They do not need to forfeit any collateralized assets in the event of default. The ability to access zero collateralized financings enhances the business’s credibility.

Faster and Flexible

Since businesses usually seek working capital financing to meet their immediate cash flow needs, lending institutions need to process it quickly. Financiers must understand:

The significance of quick financing and the need for businesses to revive their operations quickly.Flexible repayment terms. Interest rates may vary depending on the risk associated with the industry and the business model.

Positive Impact on the Turnover Ratio

To fully understand the benefits of working capital financing, one needs to be familiar with the working capital turnover ratio first. Working capital ratios indicates how well the business meets its current obligations. It also shows how much working capital financing it will need moving forward. However, this is not the financing option to go for if you do not have the cash flow to meet periodic payments. If your business has an unproven track record, pursuing a collateralized contract may still be the dominant strategy until your credit rating improves.

At Capital Biz Solutions we can have your working capital request funded in as little as 72 hours. Working capital requests come in the form of working capital loans, lines of credit, invoice financing, and overdraft lines of credit. Please call us at 508 864 7758 for a no-cost consultation to see what form of working capital works best for you. Or visit us on the web at https://www.capitalbizsolutions.com/. We look forward to assisting you with your working capital needs.

How resilient are the banks today?

When financiers and governments redesigned the financial system in order to make it safer after the debacle of 2007-09, most of them imagined that a shock as bad as the subprime fiasco would be a generation away. In fact it arrived only a decade or so later. Lockdowns have led to a savage recession that is expected to produce huge loan losses as firms and households suffer.

So are too-big-to-fail banks really safer? The latest stress tests conducted by the Federal Reserve suggest the answer in America is “yes”. On June 25th the Fed released the results of its annual exercise, which compares banks’ buffers with the losses they would face in a downturn. In a pessimistic “u-shape” scenario, in which the economy faces prolonged social distancing and repeated outbreaks of the virus, the Fed reckons that banks would face total losses of over $700bn on their collective loan book. The hit is well above the worst case of $465bn that was envisaged in 2009 when the Fed did its first stress test. This year’s scenario implies cumulative losses on loans of about 10%, above the 7% loss rate actually experienced during the subprime crisis.

Happily, the Fed concludes, in this u-shape scenario the banking system’s total core-capital ratio would fall from the present 12% to a still-passable 8%. Some banks might have to limit the dividends they pay their shareholders in order to bolster their capital positions—indeed, on June 29th Wells Fargo said it would have to cut its payout. But this is a small price to pay. Instead, the banking system’s new resilience means that customers and investors did not rush to withdraw funds as in 2007-09. Banks were seen as safe.

Lenders in turn have had the resources to extend overdrafts to firms in need. Risky activities have migrated beyond the banking system. The result is that even though taxpayers have not had to bail out banks, they have once again been exposed to huge potential losses.

The Fed has made purchases in, and extended implicit guarantees to, many markets—including those for junk bonds and exchange-traded funds—and is also lending directly to firms. At Capital Biz Solutions we have noticed that lender guidelines are tightening as they continue to mitigate their risk in this challenging environment. However, we continue our dialogue with lenders nationwide and have been successful in acquiring working capital, for all industries, including bridge financing, real estate funding, term loans, and revolving lines of credit. Please visit us on the web at

https://www.capitalbizsolutions.com/ or simply call us at 508 864 7758. We are to assist you with your working capital needs.

How Blockchain Will Transform The Economy

Blockchain is essentially a digital ledger where transactions are recorded. Each party has full access to this “ledger” and its history of transactions however, none of the parties control the data. These “parties” are uniquely identified by 30+ alpha numeric addresses called nodes. Transactions happen between these “nodes” and they have access to all transactions within the database. When a transaction occurs, its record can not be altered because it is linked to all transactions prior - hence ‘chain’. “Various computational algorithms and approaches are deployed to ensure that the recording on the database is permanent, chronologically ordered, and available to all others on the network” (The Harvard Business Review).

Blockchain In Action

Given these facts, blockchain will eventually provide a new foundation for our economic and social systems. Using blockchain for everything from encoding contracts to tracking products in complex supply chains (which is already being done by some companies) will be the norm eventually. Nowadays, a typical stock transaction takes up to a week. With blockchain, a stock transfer would occur within seconds. In day-to-day operations, businesses are required to keep records of all transactions. Right now, those records are being distributed across functions instead of being centrally located in one master ledger. Imagine how much time will be saved when those transactions are in one central location and no longer need to be reconciled between private ledgers.

Four Essential Stages of Transformation

Blockchain technology will take years to become a technological infrastructure yet, it will happen. This “transformation” is taking place in four stages:

1. Single Use
   Think of how even in its infancy, bitcoin supplied value to users as an alternative payment method.

2. Localization
   As network technologies previously evolved business, blockchain innovations will build on single-use applications with the creation of local private networks where organizations are connected through a distributed ledger.

3. Substitution
   Applications that build on localization and single-use involving high levels of coordination and increasingly broad and public uses.

4. Transformation
   Coordination of activity on every level requiring institutional adoption of standards and processes.

The question is not whether but, when will blockchain make this transformation. Inevitably, it will affect all aspects of business. The question is, how will it affect you?

Want some guidance on how blockchain will affect your business? Give us a call 508-864-7758.

The Challenges of Cannabis Lending

Finding the appropriate lending source in the Cannabis Industry can be extremely challenging. Debt lending, asset-based lending, and equipment leasing in the industry seems to have little to no continuity.

Additionally, rates and terms seem to have a vast array of components and are rarely fluid. To add to the confusion, many brokers in the industry seem to be nothing more than fee and file collectors. Many of them do not concentrate on closing the deal because most times they simply can’t.

Why is that? Many brokers who claim they are Cannabis friendly and can get the deal closed are imposters and focus on fee collecting and bogus term sheets. They typically waste their prospect’s time because they do not have the proper resources on hand. Capital Biz Solutions has over twenty years of experience in dealing with lending sources.

Our focus is to get your deal to the proper lending source and get it closed. We have aligned ourselves with the experts in the Cannabis lending industry that will serve you well now, and in the future. Capital Biz Solutions has broker affiliations with key lenders in the Cannabis industry throughout the US. We have one goal and are truly focused on closing your loan, and we do! So, if you are a Cannabis entrepreneur, and need funding resources to grow your Cannabis business, please check us out on the web at https://www.capitalbizsolutions.com/ or simply call us at 508 864 7758. You’ll be glad you did! We look forward to growing your Cannabis business.