FAQs

• Working Capital Management
• Business Expansion
• Debt Reduction
• Research & Development
• Emergency Funding

Factoring is an advance on its accounts receivable invoices. If a business is waiting for payment on its current receivables, factoring them (selling them at a discount) can free up cash.

Consistent receivables and customers are the easiest way to access receivables financing. Given it is secured by the payment of the receivables, the small business may not need to have good credit or be established.

Businesses that sell any goods or services where their customers extend repayment terms of 30 days or greater should consider accounts receivable financing. Common industries include staffing, transportation, manufacturing, distribution, technology, and logistics companies.

It is different from a conventional loan because it may be ongoing. The business will submit unpaid invoices for work completed and the factoring company will verify, sometimes by speaking directly to the customer, and then advance funds generally of up to 95% within a day or two.

A *business loan or funding is typically a funding in which a lump sum, upfront amount of cash is provided to the borrower (directly to the business). It is repaid on a regular basis with fixed payments over a fixed amount of time.

*Not available in all states.

Pros

• A set, predictable payment schedule
• Flexibility of repayment terms
• Available from a variety of financing providers

Cons

• Repayment is guaranteed
• No fluctuation in payments as business revenue fluctuates
• May require a pledge of collateral

Minimum requirements are six months in business, at least $8,000 in monthly revenue; additional underwriting criteria will apply.

ECG, along with some other capital providers, offer traditional business loans. Given most of the underwriting is centered on the cash flow of the business, a lower personal credit score doesn’t mean you will not qualify for credit. However, this may impact the terms of the offer received which could include shorter term or higher pricing.

Once you apply and are approved, the benefit is funds may be available as soon as the same day or next business day. You should consider if during the evaluation process there will be soft or hard credit pulls and if there are early prepayment discounts. Repayments may be through automatic bank account deductions (ACH) and as long as you are consistent with your repayment history there could be additional capital available to you in the future.

This type of financing is often successfully utilized for growth initiatives where the core business is stable and revenue is not subject to significant fluctuation.

Equipment leasing is an alternative to acquire fixed assets or business related equipment.

Terms are generally 6 to 84 months with monthly payments with a low or no down payment on the equipment. The leased equipment is utilized as collateral, and in the event of non-payment, it can be repossessed.

Numerous companies extend support for equipment leasing, and the optimal source depends on your credit profile.

General requirements are an understanding of the equipment, at least 6 month’s time in business, and a FICO over 600.

Equipment leasing can be accomplished when purchasing various assets, including construction equipment, farm equipment, medical and dental machines, office equipment, restaurant equipment, vehicles, and software and communication technology.

Revenue-based financing offers small businesses capital through the purchase of the future receivables of a business linked to a fixed percentage of its monthly gross revenues. Remittances of the percentage of receivables fluctuate based on the business’s monthly revenue, providing flexibility as their earnings fluctuate.

Pros:

• Flexible remittance schedule as revenues fluctuate
• No repayment guaranty even if the business fails or files bankruptcy
• Capital for growth that is easy to obtain and has no fixed term of repayment
   

Cons:

• Remittances are typically daily or weekly and debited via ACH
• Pricing will vary based primarily on business risk profile
• If the business’ revenue increases, then remittances may increase

Apply directly on the ECG website or call to speak directly to one of our funding specialists at 877-204-9203

Minimum qualifications: a U.S. based small business with a business bank account, a minimum of 6 months in business, and at least $8,000 a month in revenue; additional underwriting criteria will apply.

– If you are a small business with few fixed assets
– If you have immediate short-term capital needs and prefer the variable nature of remittances with this product
– If you own a business which is “project-based” and produces a fluctuating revenue stream

An SBA loan or funding is often originated by an advisor who works directly with a bank and/or with the SBA. Once the SBA credit application is approved, a bank will provide the loan or funding but the SBA will guarantee a portion of it.

Pros:

• Cost of capital is lower than most other loans or fundings
• Longer repayment terms
• Lower monthly payments

Cons:

• Process to obtain is longer than other loans or fundings
• Front-end fees may be charged
• Higher paperwork burden

Every situation is unique, but there are minimum standards around business owner FICO, time in business, profitability, and business net worth. How the capital will be utilized will determine which program and exact requirements.

Assuming the requirements are met, this loan or funding will typically be a lower cost option and should be considered when there is time for the business owner before the closing and capital is required. Key issues that may prevent the business from accessing an SBA loan or funding are poor owner credit, too much existing debt, lack of collateral, prior bankruptcy or negative taxable income.