As the financing landscape makes it more challenging for businesses to secure adequate financing, alternative solutions are coming to the forefront. Banks are turning down applications for loans, and businesses do not want to take on extra debt. There are many alternative financing solutions out there for businesses, but are there viable debt-free options that can provide the working capital necessary to sustain and grow operations.
Merchant Cash Advances and Debt-Free Financing
Merchant cash advances are frequently advertised as debt-free financing. After all, they do not depend on credit ratings or collateral, and provide an advance in capital against future sales. That seems fairly simple, but there’s a bit more to merchant cash advances when you look beyond the shiny advertising. In order to repay the balance on a merchant cash advance, your business needs to accept credit card payments. While credit card payments are fairly ubiquitous, paying off the balance within the time frame laid out in the terms is still challenging if your invoices have staggered schedules of 30, 60, or 90 days. Additionally, when a customer pays via credit card, a small percentage is taken from the sale and automatically put towards repayment of the balance. On the surface, this looks like it gives businesses more flexibility compared to fixed monthly payments. In reality, each payment costs the business more in credit card processing fees, high interest rates, and more. For a solution that is marketed as being debt-free and flexible, a merchant cash advance can end up being very expensive.
Factoring as a Debt-Free Business Financing Solution
Factoring is a viable debt-free business financing solution that provides working capital and transparency. Factoring allows businesses to leverage unpaid receivables for fast access to working capital. There are no fixed payments, no hidden fees, and no collateral required. Invoices are submitted and funds are made available within 24 hours, less a small percentage that goes to the factoring company. The entire process is as simple as that, with no long-term agreements. New Century Financial offers fast and flexible invoice factoring for businesses nationwide. We put you in control of which invoices or parts of invoices get factored, and we provide tools so you can check on the creditworthiness of your clients before you make business decisions. Contact New Century Financial today to get access to an affordable debt-free business financing solution.