On February 9, 2021, the credit card company Jasper launched Jasper Rewards, a program that offers customers up to 6% cash back for referring friends. This is one of the highest cash back rates in the industry, with cash back not limited to specific categories.
Read more here.
The post [Jasper in PR Newswire] Jasper Challenges the Credit Card Industry and Launches a Rewards Program That Earns You Cash Back Based on the Number of Friends You Bring appeared first on OurCrowd Blog.
Demetrius Curry has spent the last couple years chasing a dream.
His startup, College Cash, allows brands to petition users to create photo and video marketing content highlighting their product or service, with the wrinkle being that content creators are paid by the brands in the form of credits that go directly toward paying down their student loan debt. This model awards the brands involved a level of social good will and tax benefits.
The Dallas-area founder was inspired to tackle the student loan debt crisis after talking with his daughter about the prospect of eventually paying down her own loan debt. Curry has spent the past two years building out the nascent platform, tracking down brand partners, navigating accelerator programs, enticing users and pounding the pavement to find investors willing to bet on his vision.
College Cash has raised $ 105,000 to date, and is hoping to eventually wrap the funding into a $ 1 million seed round.
Filling out the round has been its own challenge for Curry, who has struggled at times to find opportunity, even among historic levels of capital flowing into the startup ecosystem, a distinction that has been less noticeable for black founders that still make up just a small percentage of VC allocation. In the aftermath of last summer’s protests against police brutality, a number of venture capital firms issued statements decrying institutional racism and pledging to back more underserved founders, spinning up new programs for diverse founders.
While Curry says he appreciates the scope of the problem and the good intentions of those making the statements, he believes that venture capital networks still have a lot to learn about what being an “underserved” founder means, and that plenty of the existing efforts feel like “lip service.” He says that even as Silicon Valley continues to idolize dropouts from prestigious universities, stakeholders have less interest in recognizing the accomplishments of founders who fought their way through poverty or found opportunity in geographies where opportunities are harder to come by.
“You can’t look for something different if you’re looking in the same places,” Curry tells TechCrunch. “When you look at the topic of ‘underserved founders,’ it’s not only a skin color thing, it’s also about where they came from and what they’ve been through.”
Curry says that it can be frustrating to compete for early-stage opportunities when investors aren’t willing to meaningfully adjust their parameters. Of particular frustration to Curry has been navigating the world of “warm introductions” to even get a foot in the door for programs meant for diverse founders, or applying for early-stage programs geared toward the “underserved” only to be told that they weren’t far enough along to qualify.
“Think about how much we had to go through to even get in the room with you,” Curry says. “I’ve sold plasma to pay a web hosting fee, nothing is going to stop me.”
College Cash’s mission of expanding opportunities for people struggling to manage their student loan debt is personal to Curry, who saw his life turn around after going back to school.
Decades ago, fresh out of the military, Curry said he had a random conversation with a stranger while eating at a Hardee’s — the discussion about what more he wanted from life ended up pushing him to to go back and get his GED and later a business degree. What followed was a career in finance that eventually led toward his recent entrepreneurial pursuits with College Cash.
The platform is firmly an early-stage venture at the moment, but Curry has big ambitions he’s building toward. His next effort is building out a College Cash tipping integration with gig economy platforms, with the aim that users of those platforms could ultimately opt to tip a worker and route that money directly toward paying down that person’s student loan debt.
Curry says the team at College Cash has been working with a “national gig economy platform” to run a pilot of the integration and has run focus groups showing that users are more likely to tip when they know that money goes toward erasing loan debt.
It’s difficult to get credit if you don’t have credit.
That’s the problem that startup TomoCredit is trying to solve. Co-founder and CEO Kristy Kim came up with the concept for the company after being rejected multiple times for an auto loan while in her early 20s.
Kim, who immigrated to the U.S. from South Korea with her family as a child, was disappointed that her lack of a credit history proved to be such an obstacle despite the fact she had a job “and positive cash flow.”
So she teamed up with Dmitry Kashlev, a Russian immigrant, in January of 2019 to create a solution for other foreign-born individuals and young adults facing similar credit challenges. That fall, the startup (short for Tomorrow’s Credit) was accepted into the Barclays Accelerator, powered by Techstars.
The San Francisco-based fintech offers a credit card aimed at helping first-time borrowers build credit history, based on their cash flow, rather than on their FICO or credit report ratings.
Today, Tomo announced a $ 7 million seed funding round that included participation from a slew of investors including KB Investment Inc. (KBIC) — a subsidiary of South Korean consumer bank, Kookmin Bank — along with Barclays, Knollwood Investment Advisory, BAM Ventures, Passport Capital, Ulu Ventures and Strong Ventures.
Angel and individual investors also put money in the round, including: Backstage Capital founder Arlan Hamilton, ex-Venmo COO Michael Vaughan and James Kim, former head of finance at Tinder.
More than 30 million young adults are considered “cash rich” but with limited credit histories, making their only option to use debit cards, according to the Consumer Financial Protection Bureau.
TomoCredit is a credit card that operates with a debit card model that is issued by Community Federal Savings Bank, a member of the FDIC. Users make payments on a seven-day automatic payment schedule with no fees or APR applied. Credit limits average around $ 3,000, but can scale to a maximum of $ 10,000. Borrowers can link to their investment accounts to increase their credit limits.
“We set out to build something that wasn’t just more inclusive, but fundamentally different from existing consumer credit card offerings,” Kim said.
She emphasizes the card is not just for immigrants, but for anyone that is considered “no file or thin file” when it comes to credit history.
Getting rejected for the auto loan made Kim realize that in the U.S., “everything is really difficult without a credit score.”
“It doesn’t matter whether you have income or savings or not,” she said. “I thought it would be really nice if we could leverage different data sources, especially cash flow data, instead of credit history. We are living in 2021 and open banking is popular, so it’s easier to get access to open banking data. And we leverage your cash flow data to underwrite you.”
Another unique aspect of Tomo’s model, Kim believes, is that it makes money through merchant fees and not through the consumers who use its card.
“Unlike incumbent credit card issuers, we aren’t incentivized by slapping fees on borrowers for making late payments — we make money as our cardholders spend — so we grow as you grow,” Kim added.
TomoCredit cards became available in late summer 2020.
“We didn’t expect much, to be honest, because it was our first launch and we didn’t do any marketing,” she recalls. “However, we are able to get over 300,000 people signing up, and then we are able to pre-approve half of them. Since then, we have been aggressively issuing cards.”
Demand for the company’s card skyrocketed last year after it “went viral” on YouTube and Reddit, Kim said.
“Right after we launch, we got huge jumps in traffic. We found out that many YouTubers were commenting and reviewing Tomo, and the comments were from people who were looking for our solution to build credit score fast and efficiently.”
Today, Tomo has over 10,000 active users and the company plans to issue cards to the remaining pre-approved applicants by this summer.
I was curious if Tomo had trouble convincing investors considering the risk it would be taking on.
Kim acknowledged having to help them overcome the “emotional and psychological hurdle” of the risk involved with issuing a credit card to people with no credit history.
“I had to help them understand that the environment is changing,” she said. “When you look at the new generation of consumers, especially Gen Z and millennials, you will see that the majority of them have a thin file or no file at all. And that’s not their fault. People have different personal finance behavior than in the past, which makes it harder for traditional lenders to evaluate them.”
Backstage Capital founder Arlan Hamilton is one of the investors TomoCredit won over.
“I spend a lot of my time these days investing in and catalyzing products that right the wrongs that my family and so many others endured as I was growing up,” she wrote via email. “One of those themes is in establishing and maintaining good credit and having an alternative to predatory lending. Tomo Credit feels to me like it is tackling this in a hugely scalable, mainstream way.”
Mariquit Corcoran, group chief innovation officer at Barclays, said she was impressed by Kim’s “tenacity and passion” when she first presented her idea of solving “a real-life problem facing many people who have traditionally struggled to access credit and build a financial profile.”
“I look forward to watching their growth and impact in changing the way an individual’s credit worthiness is determined,” she wrote via email.
Looking ahead, Tomo plans to use its new capital to triple its headcount of 15, mostly with the goal of hiring full stack and data engineers. Recently, it tapped a former LendingClub exec, Chaomei Chen, to serve as its acting chief risk officer. The startup also plans to use the money in part toward product development, such as adding more interactive features.
Tomo is not the only fintech with an alternative credit model. X1 Card sets limits based on your current and future income instead of your credit score. And, Grow Credit is a startup that launched in 2019 to help customers build out their credit scores by providing a credit line for online subscriptions like Spotify and Netflix.
An “anonymously”-led startup called Millions has raised a $ 3 million seed round for its fintech company that’s currently giving away free money through its Twitter account. The concept, inspired by the likes of YouTuber David Dobrik, is partly aimed at attracting attention for the new company but is also setting the stage for a forthcoming business model of sorts, where brands could participate in giveaways more directly.
The idea of brand and cash giveaways is not a new one, of course. Outside of social media personalities and traditional sweepstakes like Publishers Clearing House, the mobile game HQ Trivia more recently had tried to integrate brand giveaways in an attempt to draw players to its live trivia games. But HQ Trivia couldn’t maintain an audience after the novelty wore off and eventually shut down, after also dealing with internal strife and tragedy.
Millions has a different idea. Instead of weekly live games, users follow the Twitter account @millions, which either does a drop of some sort or gives away money to its followers every month. This month, for example, the account is launching its “million dollar sweepstakes.” Users follow @millions on Twitter, visit Millions.app, the enter 6 numbers. If all 6 match, they win $ 1 million*. (See details below).
Next month, the startup will launch a game called “are you my number neighbor?” where users will enter their phone number on a website, and if it’s just a digit off from the phone number on the site, the user wins $ 100,000.
These stunts — apparently just giving away investor cash — are meant to raise brand awareness and acquire customers.
“If you think about customer acquisition costs — and this is a little bit controversial — people just give money to Facebook or Instagram, or Apple or Google. The money goes straight to a social network and not the people,” explained a Millions co-founder, who asked to remain anonymous. “They’re trying to get the people, but they’re not giving the people the money. The Millions way is really giving the people the money. We don’t need to run advertisements. We’re giving the money directly to the people, and hopefully, they follow our ecosystem, subscribe for updates, and they’ll see the future launch,” they said.
Ultimately, the larger plan for Millions is to transfer the customers it acquires through the games to the fintech play, which will also have something to do with winning money.
TechCrunch agreed to not reveal the co-founders’ name during a discussion to learn what the startup was up to, as they said they wanted to keep the game playful and anonymous for the time being. But we’re not breaking any agreements by pointing to what’s easy-to-access, publicly available data. We found the company, Mycard Inc. is referenced on the Millions website’s Terms as the legal entity behind this endeavour. That same company is on this SEC filing for a $ 3 million fundraise in December 2020. The filing lists two names: Kieran and Rory O’Reilly. These are the same names as the brothers behind gifs.com.
Investors in the startup’s seed round included Giant Ventures, 8VC, Supernode, Supernode, Twitter co-founder Biz Stone, Italic CEO Jeremy Cai, Allbirds co-founder and CEO Joey Zwillinger, Casper co-founders Neil Parikh and Luke Sherwin, MSCHF head of strategy and growth Daniel Greenberg, CEO of Deel Alex Bouaziz, CEO of Hellosaurus James Ruben, CEO of Beek Pamela Valdes, PM at Facebook (for the Payments Gateway team) Luis Vargas, co-founder of Block Renovations Koda Want, CEO of Nebula Genomics Kamal Obbad, plus some of the co-founders from Warby Parker and Harry’s, and other fintech angels.
A few investors also agreed to vouch for Millions on the record, and hinted at the MyCard product to come.
“This company is creating delight from what would otherwise be the mundane, everyday necessity of swiping a credit card. We invested in Millions because they will spark joy in people’s lives, and think the traditional points model of accumulating hard-to-use airline and hotel points is tired, and ripe for reinvention,” said Allbirds co-founder and CEO Joey Zwillinger.
“Millions is building an incredibly loyal audience through an unparalleled, engaging customer experience and the $ 1M giveaway is only the tip of the iceberg of what’s to come. These are some of the strongest founders I know and have truly captured lightning in a bottle,” said Italic CEO Jeremy Cai.
“I invested in Millions because the trend is clear – people love winning money.It’s clear that there’s something going on here. Millions is dedicated to giving away money in crazy ways and I’m happy to be involved,” said MSCHF head of strategy and growth, Daniel Greenberg.
Millions’ arrival, however, comes at a time when people are desperate for money due to the economic downturn driven by the COVID-19 pandemic and lack of government assistance. The pandemic has exacerbated the class divide, leading people (including the Pope) to question whether capitalism has failed. It has fueled the “eat the rich” ethos behind the GameStop frenzy. And this situation has added a darker layer to otherwise do-gooder activities, like Dobrick’s stunts or Lexy Kadey’s TikTok “Venmo Challenges,” where she tips waitstaff and fast food workers hundreds or even a thousand dollars and films them breaking down in relief.
Millions’ co-founder acknowledges we’re in a time of need, but also argues that’s why the product makes sense.
“If you think about what’s going on in the world right now — with the pandemic and the 99% versus the 1% — people are looking for a) hope and b) money,” they said. “If you can combine a product that has two of those things, you’re giving people fun, excitement, and something to look forward to…I think that’s really inspiring.”
*Note: Like many sweepstakes, you’re playing for a “chance” to win. But in this case, $ 10,000 is a guaranteed Grand Prize win for one person. The Millions website lists the digital promotions company Realtime Media as being involved in helping manage the game. However, the insurance provider that insures the program is actually HCC.
Workday Inc., a provider of enterprise cloud applications for finance and human resources, has announced that it is all set to acquire employee feedback technology company Peakon ApS in cash. “By joining forces with Workday, we’re able to accelerate our mission to help every employee drive the change they want to see,” says Phil Chambers, co-founder and CEO of Peakon.
Workday will acquire Peakon for $ 700M (approx €577.4M) in cash. The transaction is expected to close in the first quarter of Workday’s fiscal year 2022, ending April 30, 2021.
Orrick and Bech-Bruun are serving as legal advisors to Workday, and Wilson Sonsini Goodrich & Rosati, Osborne Clarke, and Highbridge are serving as legal advisors to Peakon and its shareholders.
About Workday and Peakon
Workday, founded by David Duffield, is an American on‑demand financial management and human capital management software vendor. The company’s applications for financial management, HR, planning, spend management, and analytics have been adopted by organisations around the world and across industries – from medium-sized businesses to more than 45 per cent of the Fortune 500 companies.
As for Denmark-based Peakon, it is an employee success platform that converts feedback into insights. With the largest standardised data set of employee feedback in the world, Peakon claims to provide customised benchmarks and personalised insights to support its mission of helping every employee drive the change they want to see. To date, Peakon has helped organisations like Capgemini, The Adecco Group, Delivery Hero, Staples and easyJet.
Aim of this acquisition
With this development, Workday will provide organisations with a continuous listening platform, including real-time visibility into employee experience, sentiment, and productivity, to help drive employee engagement and improve organisational performance.
“Bringing Peakon into the Workday family will be very compelling to our customers – especially following an extraordinary past year that has magnified the importance of having a constant pulse on employee sentiment in order to keep people engaged and productive,” says Aneel Bhusri, co-founder and co-CEO, Workday.
The combination will merge intelligent technology from Peakon that determines and distributes surveys and information to the right person at the right time, with the comprehensive employee insight in Workday, to help leaders discover and respond to evolving employee feelings, needs, and behaviours.
For example, customers will be able to gain better insights and understanding on employee belonging, which will help them adjust plans to encourage an inclusive workplace culture.
Josh Bersin, global industry analyst, says, “Listening to employees has become one of the most urgent strategies to build agility, responsiveness, and growth. Workday’s acquisition of Peakon will enable Workday customers to deploy a highly targeted and integrated employee listening strategy, addressing a top priority in employee experience today.”
Data with regards to employee sentiment of 2020
Peakon’s Heartbeat website that shows macro-trends has accumulated 153 million survey responses and found out that in 2020, the focus was on how companies and employees were responding to the COVID-19 pandemic.
A surprise finding: “We saw that from the start of 2020 through July, employee engagement actually increased 2 per cent globally for Peakon customers. In addition to this, we also observed a 5% increase in employees feeling their mental well-being was a priority for their employers,” mentions Phil Chambers, Peakon’s co-founder and CEO, in a blog post.
According to the website, in 2020, employees missed out on career growth. The data shows that the formal recognition of that learning through growth and career progression has slowed slightly.
Getting caught up in turning a profit at the expense of managing cash flow is all too easy for small business owners. Consider that 82 percent of small businesses fail because of cash flow-related issues. Furthermore, 84 percent of small businesses are not profitable until the fourth year, so you can see that your business’s cash flow should be a primary focus.
So, what do you do if you cannot qualify for a traditional personal or business loan to bolster your business?
For many entrepreneurs today, merchant cash advances offer a vital lifeline in an otherwise murky landscape. Alternative financing can be a viable solution if you need money quickly and with few qualification criteria. We have put together a list of the eight best merchant cash advance services you might consider for your business.
The Top 8 Best Merchant Cash Advance Services
- Fundbox – Best For New Business
- PayPal Working Capital – Best For High Volume PayPal Sales
- National Business Capital – Best For Large Loans
- National Funding – Best For Long-Term Financing
- Can Capital – Best For Bad Credit
- Stripe Capital – Best For High Volume Stripe Sales
- Reliant Funding – Best For Quick Funding
- Main Street Finance Group – Best For Consolidating MCAs
Read on to see our reviews of the top eight merchant cash advance services and learn how a cash advance works and how to choose the best one for your needs.
#1. Fundbox – Best Merchant Cash Advance For Startups
- Good for entrepreneurs and startups
- Borrow as little as $ 1,000
- Up to $ 50,000 without collateral
- Credit score of at least 500
Most merchant cash advance services target relatively established businesses, making it difficult for new business owners to qualify. Fundbox has some of the lowest requirements to be eligible for a business line of credit.
You can borrow as little as $ 1000, which is perfect for solving day-to-day petty cash shortfalls quickly. You can also borrow up to $ 50,000 without collateral or a personal guarantee. However, you will need to provide a personal guarantee and blanket lien for amounts exceeding $ 50,000. The maximum amount for borrowing is $ 150,000 with Fundbox.
Fundbox’s credit score requirements are also low and easy for small businesses to qualify. You only need a credit score of at least 500 and at least three months in business.
Accounting software also integrates with Fundbox to make the application process painless. Fundbox syncs with the most popular accounting software, including QuickBooks, FreshBooks, Jobber, Xero, Clio, Harvest, Zoho, eBility, and Jobber. As long as your accounting software reflects at least three months’ transaction history and $ 5000 or more in monthly revenue, you have a good chance of qualifying.
You can also link your checking account, but you will need at least six months of credit card transactions in your business account. Fundbox can be flexible with its requirements, particularly if you have high monthly revenue.
The application process is mostly automated with minimal paperwork. Most applicants receive a verdict within minutes, and the money can be available in as little as a day.
While Fundbox has all the MCA features tailored for small businesses and startups, the fees can be a little high. The APR ranges between 10.1% and 79.9%, depending on your terms. Some people may also find the 12-24 week repayment period a little short.
Overall, if you are happy with the fees, Fundbox is one of the most forgiving merchant cash advances (more accurately, a business line of credit) out there for startups with its low requirements.
#2. PayPal Working Capital – Best Merchant Cash Advance For High Volume PayPal Sales
- Financing based on PayPal history
- Repayment between 10%-30%
- Borrow up to $ 20,000
- Minimum $ 1,000
If you primarily accept PayPal payments, qualifying for a merchant cash advance can be a little tricky. Most institutions only allow you to link your bank account or accounting software to determine your eligibility.
This financing option bases your eligibility on your PayPal account history. You don’t have to worry about your credit score or a hard check that may affect your score.
The qualification criteria are also relatively accessible. You need a PayPal Business account or Premier PayPal account with at least three months of transaction history. Additionally, you need annual sales exceeding $ 15,000 for the Business account and $ 20,000 for the Premier account.
It’s also hard to beat PayPal Working Capital’s speed. You get your verdict in just a few minutes, and the funds are made available in your PayPal account almost immediately after approval.
Repayments work on a percentage basis. You choose what percentage of your daily sales go towards repaying the advance. The repayment ranges between 10 and 30 percent, with lower fees applied for higher repayments. The only catch is that you have to pay back the amount plus fees within 18 months. PayPal Working Capital reports that most borrowers clear their loan in one year.
You can borrow up to $ 20,000 with a minimum of $ 1000. The repayment is also transparent, and you know exactly how much you will be paying back, with no hidden fees.
PayPal Working Capital is technically a business loan and is perfect for PayPal merchants with a good track record of PayPal sales. This is true if you are comfortable with the factor rate of between 1.01 and 1.58.
#3. National Business Capital & Services – Best Merchant Cash Advance For Large Loans
- Borrow between $ 10,000 and $ 5mm
- Franchise & comm. mortgage financing
- Need at least 6 months in business
- Receive funds in 1-3 business days
National Business Capital & Services isn’t a direct lender but connects applicants with over 75 lender partners. The institution boasts a 90% approval rate for small businesses, which is believable given its vast lender network.
First off, NBC offers a wide range of products, including merchant cash advances, invoice financing, franchise financing, commercial mortgage financing, online small business loans, and business lines of credit.
You can borrow between $ 10,000 and $ 5 million, depending on how much you qualify for. Repayment is based on a percentage of daily sales.
The requirements also aren’t too bad for seasoned businesses with high revenue. You need at least six months in business and $ 120,000 in annual gross sales. National Business Capital & Services also claims to work with all kinds of credit profiles and will most likely not run a credit check as long as you meet the requirements. In the instances where National Business Capital & Services does a credit check, it is a soft pull that will not hurt your credit score.
Additionally, you don’t need to put down collateral, especially for the lower amounts. You receive the funds in 1-3 business days after your application is approved.
You have to fill out an application to receive a personalized quote.
#4. National Funding – Best Merchant Cash Advance For Long-Term Financing
- Great for small businesses
- Rewards loyalty and on-time payments
- Borrow between $ 5,000-$ 50,000
- Credit score of at least 500
If you are looking for a long-term merchant cash advance partner for your small business, you can hardly do better than National funding. Their service is described as a working capital loan but is indistinguishable from a merchant cash advance. The company also offers equipment financing should you need to weigh your financing options.
National Funding rewards loyalty and customers who pay on time. For example, you can get an extension on your first capital loan as soon as you pay off 50% of the loan. Unlike most other MCAs, National Funding rewards rather than penalize you for repaying your loan early. You automatically get 7% off your total remaining balance if you repay the loan within the first 100 days.
You can borrow between $ 5000 – $ 500,000, which is a good range for most small to medium-sized businesses. Additionally, you qualify for better future loan rates if you keep your account in good standing by repaying on time or early.
Loan terms vary between one and five years. Again, you can qualify for more extended periods by keeping your account in good standing. You also don’t need collateral or a personal guarantee for funding below $ 250,000. However, you will be required to file a blanket lien over your business assets if you borrow more than $ 250,000.
To qualify, you will need at least three months’ worth of bank statements and a credit score of at least 500. Factor rates start from 1.17 per week, but you will have to sign up before accessing the actual rate. This design makes it difficult to price shop, and a rate calculator would have been handy. Still, you are not obligated to agree to the terms should you find the rate too high for your liking.
#5. Can Capital – Best Merchant Cash Advance For Bad Credit
- Good for owners with poor credit
- Borrow between $ 2,500 & $ 250,000
- Payment schedule based on sales
- Daily automatic ACH deductions
The main attraction for alternative funding is the accessibility of financing, particularly if you have poor credit. Can Capital has over 20 years of experience and has served more than 80,000 businesses with over $ 7 billion in funding.
You can access between $ 2500 and $ 250,000, which is a decent range, particularly for startups. The qualifications are also reasonably easy to meet and include at least six months in business and gross revenue of $ 150,000.
The kicker, and what makes Can Capital so attractive to business owners with poor credit, is that there is no minimum credit score required. The underwriting process heavily relies on your gross revenue, which works out well if you meet the $ 150,000+ threshold.
Furthermore, Can Capital can finance business owners with a history of personal or business bankruptcy, as long as it has been at least one year since you obtained a discharge.
You will need to pay an origination fee of $ 595 to process your merchant cash advance. Although the financer does not have a minimum credit score requirement, they may sometimes perform a hard credit pull. Can Capital may also file a blanket UCC lien on your business assets, particularly for significant advances.
Finally, your payment schedule is based on your credit and debit card sales. You set up daily automatic ACH deductions based on the agreed-upon factor rate.
#6. Stripe Capital – Best Merchant Cash Advance For High Volume Stripe Sales
- Great for Stripe users
- Takes % of daily sales as payment
- Qualify for up to $ 25,000
- Need 12 months of Stripe history
If you primarily use Stripe for your business, there is no need to set up a different business account or link your accounting software. Stripe Capital also has no minimum credit score requirements. The financer only considers your Stripe history when making a final verdict.
You can check your eligibility before you sign up for the advance. Simply enter the required information, and Stripe will let you know if you are eligible for an offer. Typically, Stripe will send you three offers to choose from, with the additional option of customizing your loan amount.
Strip Capital takes out a pre-agreed upon percentage of your daily sales until you clear the advance. The maximum loan term is 18 months, and you can qualify for up to $ 25 000. Your repayment rate depends on the amount advanced. There is also a standard loan fee of 10% of the loan amount.
You need at least 12 months history of using Stripe to qualify, and you can receive funding in as little as 24 hours after you are eligible.
#7. Reliant Funding – Best Merchant Cash Advance For Quick Funding
- Fast funding
- Good for emergencies
- Revenue of at least $ 100,000 needed
- Finance up to $ 250,000
If you need cash for an emergency, Reliant Funding offers same-day funding if you qualify for an advance. The three-step application process is quick and easy, and you will get a final verdict within hours of applying. The longest you will typically have to wait for funding is the next day.
In addition to merchant cash advances, Reliant Funding offers additional services, including lines of credit, equipment financing, and short-term business loans.
Reliant Funding does not have a minimum credit score requirement. This financer focuses more on your sales track record. You will need to have been in business for at least a year and have annual revenue of at least $ 100,000. Reliant Funding is also flexible and may agree to advance funds if you have been in business for six months but have higher-than-average monthly revenue.
The maximum financing amount is $ 250,000 with a 12-month maximum term. Like your typical merchant cash advance, Reliant Funding takes out a percentage of your daily sales until you clear the advance.
Unfortunately, there is no way to know the factor rate until you apply for the advance. They offer customized repayment terms based on their assessment of your finances and the amount you require.
If you have good standing, you can renew your funding after paying off 50% of your advance. You can choose to pay off the funds in one of two ways: Either pay a fixed percentage of your credit card revenue or ACH debits from your checking account.
#8. Main Street Finance Group – Best Merchant Cash Advance For Consolidating MCAs
- Large MCA for preexisting advances
- Merchant cash advances
- Healthcare cash advances
- Great for consolidation
It is notoriously easy to get into a debt cycle with merchant cash advances. Although we don’t advocate for stacking debt, sometimes, this is the only recourse when faced with chronic cash flow problems.
An easier way than stacking loans is to consolidate your advances with one lender, and Main Street Financing Group fits the bill. The lender offers a large MCA to cover your preexisting advances so you can focus on paying off a single debt. While you can expect the factor rate to be higher than applying for a new advance, it is still cheaper than the total cost of repaying many different cash advances. You will need to apply for debt consolidation to get your personalized repayment rate.
Main Street Finance Group also offers other services, including merchant cash advance, healthcare cash advance, equipment financing, credit lines, and collateral loans.
How Merchant Cash Advance Works
A merchant cash advance is unlike a traditional business loan. Essentially, the lender offers you lump-sum cash upfront in exchange for a percentage of your future sales.
The lender takes a pre-agreed upon percentage of your daily or weekly credit card sales until the total amount is repaid. This repayment structure means that you don’t technically have a set repayment term, although lenders typically impose a maximum repayment term. Payments are automated and generally made on a daily or weekly basis.
Rather than a standard interest rate, you instead get a factor rate, which determines the exact amount you pay back. You multiply the factor rate by the cash advance amount to find the total amount to pay back. For example, if you borrow $ 100,000 at a factor rate of 1.25, the total repayment will be $ 125,000 ($ 100,000 x 1.25).
Essentially, the more sales you make, the more money you pay back each day or week. The reverse is also true. Also, the lender will typically calculate an estimated repayment period based on your sales history.
Some of the criteria that lenders use to determine your factor rate include average monthly revenue, how long you have been in business, seasonality of the company, and revenue consistency.
Another term to be familiar with is the holdback rate. This is different from your factor rate. While the factor rate relates to the total amount you pay back, the holdback rate refers to the day-to-day payments you make towards your advance.
The holdback is expressed as a percentage and is the amount of money taken out of each day’s or week’s transactions. For example, if you get a holdback rate of 10 percent and you make credit card sales worth $ 8000, you will be paying back $ 800 on this day. If you make sales worth $ 5000 tomorrow, your lender automatically takes $ 500, and so on.
How to Find The Best Merchant Cash Advance Service
Merchant cash advance services have often been accused of being predatory. Since merchant cash advances aren’t technically loans, these companies are not subject to state usury laws.
On a more positive note, stiff competition means that the factor rates have improved over time. Still, there are a few factors that you need to keep in mind when shopping for a merchant cash advance service. We used these same criteria when picking contenders for our best merchant cash advance review.
Rates & Fees
Generally speaking, merchant cash advances are more expensive than traditional loans and other financing options, so you really want to pay attention to the rates and fees.
Watch out for the factor rate. This rate ranges between 1.14 and 1.5. Remember, the higher your factor rate, the more money you have to pay back.
Most merchant cash advance services charge a holdback rate of between 10 and 20 percent. Choose a figure that you can live with. There might also be additional fees such as an origination fee or closing fee, so ensure that you understand everything you have to pay before you agree to the terms.
Cash Advance Term
This type of financing doesn’t have a set repayment period since how quickly you pay depends on your sales. Some lenders don’t have a set deadline to clear the advance. They simply continue to take a percentage of your sales for as long as it takes to clear the amount you owe.
Others, however, have set deadlines. You may incur additional fees by taking longer than the stipulated repayment time. This time can vary between four and 18 months. Make sure you know if there is a hard deadline before you agree to the financing.
As a general rule, consider your worst-case scenario before taking the advance. Many borrowers overshoot their sales projections when applying for funding, which can be a problem if you experience slow sales and a looming repayment deadline.
Most merchant cash advance repayments are daily, although a few vendors accept weekly payments. These are automatic credit card payments, so you may have to switch to a different card terminal provider that supports your financer.
ACH withdrawals may also be an option. Typical ACH repayments work with a fixed amount, where the lender takes the agreed figure every day or every week regardless of your sales.
Some ACH repayments also work with the variable repayment, where you are paying back a percentage of your sales. Make sure you clarify this with the cash advance service before you sign the contract.
Also, make sure that you are not getting penalized for paying early. In some cases, your APR may rise if you pay back the loan faster than expected.
For the most part, merchant cash advances are more accessible than traditional loans. Most lenders require a business bank account with a history of at least six months of transactions. Others may link with your accounting software, eliminating the need to file paperwork.
Other requirements may include:
- Minimum credit score – usually between 500 and 600
- Driver’s license
- Personal guarantee
- Certain number of monthly or annual sales or credit card transactions
- Business ID
- Recent tax returns
These requirements are not always mandatory. For example, some lenders do not check your credit score, especially if you have a high volume of transactions. Others may even work with you if you have filed for personal or business bankruptcy in the past.
However, merchant cash advances extended to high-risk clients tend to attract a high factor rate.
Minimum & Maximum Cash Advance
Finally, assess your business needs and figure out how much you need. A minimum cash advance can be between $ 1000 and $ 5000, while the maximum amount can be as high as $ 5 million, depending on the lender.
Also, check how long it takes to get approved and how long it takes for the money to hit your account. Many of these lenders process applications within hours or may take up to a few days. Similarly, it can take as little as one day or as long as five business days to receive the funds you qualify for.
The best advice you can get regarding merchant cash advances is to price shop. Watch out specifically for the factor rate and holdback rate to determine whether you are getting a good deal. If you have a good credit score and a long history of high-volume credit card transactions, you may qualify for traditional business loans, which will be much cheaper to pay back. Otherwise, merchant cash advances make more sense when you are in a bind and are not eligible for conventional loans.
Moreover, a merchant cash advance is more of a quick fix than a long-term solution to your businesses’ cash flow challenges. You will still need to solve the underlying issues if you hope to remain in business for a long time.
Use this guide to help you find the best merchant cash advance service for you and your business’s needs.