Customized Funding for Business Growth: Four Key Advantages
Today, banks and alternative lenders are out-competing each other to garner the attention of businesses, including small businesses. The government is also playing its part to support businesses and individuals to access tax credits, loans, and grants worth $1.6 trillion due to covid-19. Any entrepreneur venturing out for funding has a wide variety of options to choose from. There are several sources of funding, such as venture capital, angel investors, credit cards, bank loans, crowdfunding, friends and family, and small business loans.
However, a business owner needs to choose the right type of funding to promote their business goals and needs. It’s also important to be clear on how to pay back and the potential risks. Forbes advises that it’s important to do adequate research on lenders before a need or emergency arises, be aware of the options, and know the right questions to ask. Otherwise, a poorly chosen funding option will cause constraints in the running of the business.
This should be motivation to work with a lender who offers customized business funding. The lender will be equipped to identify which funding aligns with both your financial and non-financial goals.
Here are the pros of going the route of custom-made business funding solutions.
1. Matching Funding To Business Needs and Goals
Alternative lenders like MobyCap can tailor funding solutions to your needs and the strengths of your business. Customization is one of the top advantages of working with MobyCap, given that we offer a variety of business loans at competitive rates and terms. In addition, we cater to every type of business in many industries.
For merchants with significant outstanding accounts receivable, we can do an invoice factoring deal that pays UP TO 90% of the value of the AR. This deal helps businesses meet their cash flow needs to continue with operations. It also allows the business owner to take up any project that comes while waiting for their unpaid invoices to be settled. The business owner does not have to be concerned about repayment schedules or account receivables collections. In turn, it’s possible to meet needs such as paying bills and taking in new customers.
For merchants who need funds quickly, we can do a revenue advance deal in a matter of hours. This does away with a long and complicated application process. It also considers businesses with fewer or no assets and a weak credit score. As a result, an entrepreneur can take up opportunities that will grow the business and afford to repay the advance.
For merchants who want a predictable payment schedule and a longer-term (up to 24 months), we can do a term loan. This is an affordable way to acquire an asset without hurting the cash flow as the owner can plan how to fit the asset purchase into their budget. Another upside is that the business will own the asset that will help grow its revenues.
For merchants who want access to funds they can pull from when necessary (and only pay interest on what they use), we offer a revolving line of credit and a virtual line of credit. This gives the merchants confidence that they can manage operations effectively in the future in case of emergencies and expansion. With a revolving line of credit, the lender increases the credit limit if payments are timely and consistent. This also improves the credit score, making the business a promising candidate for future funding.
2. Access to Flexible Funding Terms
Alternative lenders like MobyCap can modify payments if the merchant’s revenue changes, adding a great degree of flexibility. This is further enhanced with the support of business funding experts who guide clients on their funding options. Many of our funding products include terms in the contract that allow merchants to reduce their payment amount if their revenue drops (like during the COVID-19 pandemic), which can make a huge difference in hard times and/or slow seasons. This safeguards cash flow which affects crucial business operations and emergency expenses. The idea is to work with a lender who looks beyond collecting interest payments to one that is committed to the business’ vision.
Typically, once a merchant receives traditional funding, like from a bank, the terms are set in stone and offer no flexibility. In case they default, the bank will take corrective actions such as seizing assets for auction to recover their money. For small businesses, this can have both business and personal setbacks. In 2020, Financial Times reported that there were $90 billion of loans in forbearance in US banks by individuals and businesses. As banks operate in a tight lending market, it’s naturally expected for them to tighten their policies as protective measures. This poses even more risk for businesses seeking flexible funding options.
3. Creating a Supportive and Profitable Lender Relationship
Receiving customized funding builds a relationship with the lender, who gains a deep understanding of your business and how the proper funding can help it get to the next level. Traditional bank lenders do not do this sort of due diligence, but rather simply plug numbers into an algorithm when underwriting the business. Banks tend to be laser-focused in determining the best rates for their loans. They consider factors such as inflation, the stock market, rates from competitors, and the international market. In addition, the Federal Reserve sets the interest rate at which banks can lend to each other as part of sustaining the financial system. However, the main target for banks is to set rates that generate good profits for their shareholders. One of the key findings in a 2016 Consumer Banking Survey is that customers did not trust that banks could support them with their issues.
At MobyCap, once we begin this relationship, we are only a phone call away next time the need arises and we can get the funds to the merchant ASAP. It’s also possible to do an online application, eliminating paperwork. This takes into account the busy schedule of business owners who lack the time to walk into an office and sign an application form. In addition, the borrower can make informed decisions as the funding experts will readily provide in-depth information on loan types, repayment terms, and loan approvals.
We can also improve rates and offer larger funding amounts once the merchant has built up internal credit via a good payback history. We offer one of the most generous capital offerings in the market. Since we value personal and long-term relationships with our clients, we are also invested in their growth from small-scale businesses to large-scale establishments. In response, we cater to the changing funding needs with our loan products and flexible terms.
4. Access to Funding Without Collateral
Alternative lenders like MobyCap offer unsecured, uncollateralized funding, which makes it much easier for certain types of businesses to acquire the funding they need to exceed their goals. One of our unsecured products is merchant cash advances which a business owner can borrow and easily repay based on future sales. Banks virtually ALWAYS require some form of collateral, which can hamper or create an added strain on a business. This places a great risk on existing business assets which can lead to bankruptcy.
Fortunately, our funding options are based on the revenue of the business; therefore, we do not tie up any business assets and allow the business to continue growing with the aid of our funds. This offers the peace of mind to focus on business growth strategies such as bidding for projects and purchasing new equipment to meet increasing production demands.
We do not require any personal guarantee when making offers to merchants and we do not run hard credit pulls during underwriting. Usually, a hard credit pull can decrease the credit scores of an individual with a short credit history. However, our friendly conditions are a great assurance to merchants because there are no significant barriers to accessing funds, regardless of financial history and current situation.
As alternative funding lenders and credit unions expand their market share, there are many factors to consider. It can become a hassle to choose a lender with the best loan types, amounts, repayment terms, and quick access. No business owner wants to be locked in a loan that will limit their business operations. Seeking customized business funding will halve the time and effort spent researching for a suitable lender and one that is willing to offer and adjust funding that aligns with changing business needs and seasons.
MobyCap captures this need effectively, by offering multiple and flexible funding options. We aim to support businesses at every turn through our established business relationships. We also directly engage our customers to help them find the best funding picks in the market through our experienced funding experts. We have success stories of businesses in different industries that have been able to leverage and expand their ventures.
To move forward today, contact us by email at email@example.com. As a BBB-accredited business, we have experience serving all industries and welcome the opportunity to work with your organization.