Let’s break it down: what do you get at FaaSfunds that you don’t get with a traditional loan broker?

FaaSfunds is similar to a loan broker in the sense that we facilitate and consult business loan deals. We connect businesses that need funding to lenders. We have a marketplace of dozens of lenders ready to work with businesses to finance their purchases. Through this service, we open up business loan options to businesses who need funding. This relationship between us, business and lender are mutually beneficial – every party benefits and we pride ourselves in being able to provide the best deal, every single time.

With FaaSfunds, you’re able to get several key things you don’t get with a loan broker:

  • Faster service
  • Greater efficiency with our smart application
  • No “shotgun approach” to running credit
  • Decision-making control
  • Transparency

Faster Service

We get you the best deal without hesitation. Once you enter your credit information, you’ll know your options almost immediately. FaaSfunds, though our unrivaled software, is able to compare your financial information with data points from lenders, giving you your best chance of approval and best rates all at once. With a loan broker, you have to wait quite a while for them to apply your information to lenders, and even longer to hear back.

Efficiency

Our application is smart, and that makes it easy. This streamlined application process means you only have to enter your information once, and you’re immediately connected with the business loan options you need. This saves you time, and it saves you labor. Instead of having to apply to several loans, and instead of having to wait for a broker to do their thing, you’re able to do it for yourself almost immediately. That way, you can stress less and spend more effort on running your business.

We Don’t take a “Shotgun Approach”

Generally, a “shotgun approach” is a strategy used by loan brokers to shop your business loan in a way that applies you to several loans at once, and in turn, this runs your credit multiple times. Multiple inquiries into your credit can sometimes affect your credit score, bringing it down. At FaasFunds, we don’t apply you to several loans at once, we only show you the loans you’re most likely to qualify for and their rates, putting the best rates first. That way, you can choose which funding option you want, and only have one credit inquiry at a time.

Business Loan Flexibility

We offer flexible control of the decision-making process. Since you can fill out everything on your own and immediately see your options, this gives you the power to decide what you want. We won’t pressure you to choose something you don’t want, we’re only here to help you make decisions and figure out what’s best for your business. You can change your mind without getting trapped. Since you get to see what you’re options are, and you have the power to decide what you want, we just give you the tools and information to make informed decisions.

Business Loan Transparency

You’re able to see every step of the process. You can see where your application is in the funding process, and this means you’ll be informed every step of the way. There’s no more guesswork, now you can see what’s going on for yourself. We offer this open and transparent application process to make sure you know what’s going on, and you can know all your options.

To get you the best deal, we offer you all these things a loan broker doesn’t. At FaaSfunds, we’re changing the funding game but helping you to make informed financial decisions while still giving you control and transparency in the funding process. A loan broker is no longer the only one who can help you make business loan decisions, and even though FaaSfunds is via online software, we’re still a team of real people who care about your financial health. That’s why you’ll have a funding specialist readily available to answer any and all of your financial questions. We’ll help you monitor your business credit, and even after you receive a loan, we’ll be there to help you take a plan of action to improve your credit in the future.

Contact us today to find out what we can do for your business finances, and how we can help you get funded.

We keep mentioning our “FaaSmatch” algorithm – it’s how we match your business to the best lending options out there. But how exactly does it work? Let’s break it down.

The “FaaS” in FaaSmatch stands for “Financing as a Service,” which is what FaaSfunds does. We’re taking the broker out of getting a loan, and making it easier for you and your business to find the lending options you need. We’re a business-to-business service, and our finance-matching is the service we offer.

FaaSmatch is an algorithm because it uses software analytics to automatically sort through your financial information and compare it to our lending marketplace. This way, based on data points, it can match you up with the lender that will give you the lowest rates and best terms, along with the best chance for approval. By using this automated process, you can instantly see how different lending options compare, and you can understand which one will work best for your business.

Let’s Break it Down

What is an algorithm? By definition, it’s a process or set of rules to be followed in calculations and other problem-solving operations. They’re created by constructing a set of directions, much like a map, that can be reduced to three logical operations – “and,” “or,” and “not.” You can use algorithms to solve a Rubix Cube, or you can use algorithms to run search engines.  Algorithms are everywhere. They’ve become a colloquialism. They determine what’s advertised to us and they determine what shows up in our news feeds. FaaSfund’s algorithm is different. We saw the need for an easier way to find lending options, so we spent countless hours dedicated to doing just that.

Our algorithm, called “FaaSmatch,” is a set of programmed commands that looks at financial information and compares it to data from lenders. It looks at credit and other financial factors and analyzes it alongside compiled information from our lenders to determine which loan and lending options make the most sense for each business’s financial situation.

The Goal of the Algorithm

Stefan Friend, head of product development at FaaSfunds, explains that the goal of the FaaSfunds algorithm is to help users make informed decisions.

“It’s a simple way to match a business’s credit profile holistically to the right financial products for them,”  said Friend. “Using a proprietary algorithm, we take a close look at a business credit profile and score and weigh them against the criteria for certain financial products.”

This makes the funding process quick and easy, and without the need for a broker or extensive paperwork. The FaaSfunds algorithm automates the funding process so the business owner is in charge of their own funding, but FaaSfunds lets them see what their best option is.

“Ultimately what this does is help them have a better view of the best product for their business,” said Friend, “and allows them to have a firmer grasp on their business’s financial future.”

Take a look at FaaSfunds today and see just how well the FaaSmatch algorithm works for you.

If you’re frustrated about your business being denied funding, you’re not the only one. According to the Federal Reserve, only 47% of small businesses received the amount of funding they applied for last year. Of the 53% that are denied funding, 32% received some of what they needed, and 22% received none.

Make no mistake, funds are not unlimited and lenders can only approve so many business loans. There are, however, fundamental reasons that businesses get declined. At FaaSfunds, we’re here to break down those reasons and help your business get approved.  Here are our top four reasons why businesses get denied funding.

Low Business Credit

According to the Federal Reserve, businesses considered a “high credit risk” had the most financing shortfalls. In 2018, 91% of companies with lower credit scores (usually, under 620) that applied for less than $250,000 did not get the full amount of financing they sought. Lenders are less-inclined to fund high credit risks because they don’t have the personal guarantee of repayment. Meaning that since your credit signifies your history with paying off debts, a lower score often means – to lenders – that your repayment history hasn’t been stellar.

If you have bad credit and have been denied funding, there are several alternative ways of getting funded – some online lenders cater to businesses with low credit, and options like merchant cash advances and invoice financing sometimes don’t look at business credit. The interest rates are often higher and the terms shorter, but if you can manage to prove with these alternative funding options that you’re capable of paying off debts, it can improve your credit and your chances of being approved in the future.

Not Turning Profit

In 2018, 67% of businesses that broke-even or weren’t profitable were denied funding. Being profitable can be a huge determinant for lenders – they want to see that you’re bringing in enough money to pay them back. Forbe’s calls this “quality of cash flow.” They describe that “having high-quality earnings means a company’s financial statements show stable, persistent and predictable earnings that are related to the core business.”

It’s not always possible to be a profitable business right-away, so it’s important to show that you’re capable of paying off debts. If you’re not making a profit, you might have to provide significant collateral or prove that you make enough revenue to cover the loan cost. It’s also an option to add a personal guarantor to the loan, saying that should you default, they’ll pick up payments.  

Geography

The same Federal Reserve study found that geography can also influence if a business gets funded or not. 56% of businesses located in urban areas did not receive the funding they asked for, as opposed to 45% in more rural areas. This fact might sound a little odd, considering that urban areas have more people, but actually, rural businesses out-perform urban ones.

The reason behind this is because urban businesses are met with more competition, higher operating costs and higher taxes. It costs significantly more for a business in New York City to find and pay labor than a business in Albemarle, N.C. For more perspective, the average rent in NYC is $3519/month, while the average rent in Albemarle is $564/month. These lower expenses for rural businesses easily translate to profits. Rural businesses also tend to be older and have predictable expenses, and well-established businesses are more likely to receive funding. Along with these aspects, the fact of the matter is that it’s a lot easier to get funding from a small, rural bank than it is from a national bank.

On a less statistically significant level, according to the same survey, the Federal Reserve found that companies in New England had the hardest time getting funded while those in the East South Central (Alabama, Kentucky, Mississippi and Tennessee) had the easiest time. This is on par with the rural vs. urban divided in business funding. New England is more developed and has a population density of about 210 people per square mile, while the East South Central has a population density of about 98 people per square mile.

Business Age

Most businesses younger than five years old haven’t really established credit, and that explains why according to Federal Reserve data, around 63% of them don’t get the funding they ask for. These businesses are considered startup firms and don’t often have enough established business credit to qualify for funding.

Fear not, though, because there are a lot of options for startups to get the financing they need. Certain crowdfunding opportunities can help raise money via small investments, while the SBA has a microloan program designed for startups. You can also receive grants from companies and investors.

The Big Picture

Often, one single factor isn’t going to determine if you’ll get denied funding Each lender has different parameters for approval, and if you get denied by one, it doesn’t mean you’ll get denied by all of them. Lenders look at a variety of aspects and take many things into account, so don’t get discouraged if you fit a few of the profiles mentioned above. There are hundreds of funding options out there, and FaaSfunds is here to help you understand why you got declined, and look at your business finances and help you figure out your path to approval. Check us out today.

Most people have a credit card. Chances are you have one for yourself or your business, so you’re familiar with how simple and easy they are to use. Business lines of credit work in a similar way. Using credit for your business can be a great idea to boost your financial health and fund large purchases.

A line of credit isn’t technically a loan. It’s an agreement that establishes a maximum amount a business can borrow. A line of credit can be accessed at any time as needed as long as it doesn’t exceed the maximum limit. Interest is only paid on the money used, and once it’s paid back, you can use it again – much like a credit card.

And like a credit card, the lender sets a maximum amount and the business can draw from it using either checks or a card. Borrowers can request a certain amount, but they don’t have to use it all. This flexibility is the main appeal of a line of credit, which is the most ideal for emergency funds – just in case something happens and you need your cash quick. This can help you avoid taking out working capital loans, or “payday” loans, with incredibly high interest rates.

Like using any form of credit or money that isn’t technically yours, they can have limitations and certain dangers, so it’s advised that they’re used responsibly.

Do You Qualify?

Qualifying for a line of credit is a little easier than other loans, but there are many variables associated with getting one. The maximum amount, duration, repayment terms and interest all depend on your business’s already established credit and revenue. Usually, new businesses may be able to qualify for smaller lines of credit while more well-established businesses can receive larger lines of credit.

How to Apply

Like most loans, you can get a line of credit at a bank or an online lender. Banks have long, intensive line of credit applications – they require a lot of paperwork and wait time. Online lenders will offer quicker, easier applications (and chances for approval), but will often have higher interest rates. You’ll need all the basic documentation to apply:

  • Valid driver’s license
  • Voided business check
  • Bank statements
  • Balance sheet
  • Profit & loss statements
  • Credit score
  • Business tax returns
  • Personal tax returns

What About a “Revolving Line of Credit?”

Line of credit financing is sometimes referred to as “revolving” because it usually doesn’t require you to apply again and again for a loan. This definitely comes in handy. Once you pay off what you’ve spent within your credit limit, you can use up to that limit again without applying again. It’s always there, and you don’t have to worry about filling out all the paperwork each time you pay it off. This is part of the allure of a line of credit – you save time, energy and stress by not having to apply for multiple financing options.

How do They Compare to Other Loans?

Business lines of credit traditionally have lower interest rates and closing costs, but can be pretty big on punishment. They have strict repercussions if you exceed your limit or miss a payment. Traditional loans, too, are usually used more for one time, larger purchases – like a company car. Lines of credit are best suited for repeated spending or cash flow. This doesn’t mean you can’t make large purchases with a line of credit, but often, traditional loans are better options for these types of expenditures because their interest doesn’t vary depending on what you spend.

Since business lines of credit are so flexible, they’re really attractive to use for recurring expenses. Things like:

  • Operating expenses
  • Payroll
  • Cash flow gaps
  • Emergency funds
  • Seasonal expenses
  • Investments

Do They Have Term Lengths?

No, lines of credit don’t usually have term lengths, but they do have different maximum amounts depending on where you get them. Online lenders usually will only offer small- and medium-amount lines of credit. These both don’t really have term lengths, but the “small” and “medium” refer to the maximum amount of money you can withdraw. You can withdraw and pay back funds whenever you want. Larger-amount lines of credit are usually only given out by traditional banks.

So how do They Compare to Credit Cards?

It’s true that they’re both forms of revolving credit, but credit cards have several limitations that lines of credit don’t.

  • Credit cards are typically paid monthly. Lines of credit usually are not.
  • Credit cards typically have higher interest rates.
  • Credit cards charge fees for cash advances and balance transfers.
  • Lines of credit give you access to cash. Credit cards do not.

What Will It Cost You?

Interest rates are set by the lenders and the market rates, and they vary widely according to your business specifics. However, these rates are often lower than a business credit card.

To help understand the costs associated with lines of credit, here’s an example:

You run a restaurant in a small college town. During the summer, when all the students head home or to internships, you have a lull in your business. In order to pay your expenses in June, July and August, you need some extra cash. You know that after these three months, your business will pick up significantly. So, you apply for a $25,000 line of credit.

With it, you end up spending $20,000 on your rent, payroll and supplies for those three months. If your interest rate was 10%, you’d pay back that $20,000 plus 10% in interest, for a total of  $22,000. Once you pay that off, you have $25,000 again and you can keep it to use when you have other lulls in business, like winter break.

This can all sound very overwhelming, but that’s why we’re here. When you sign up with FaasFunds, we analyze your business needs and finances and figure out if a business line of credit is the best option for you. We’ll also link you up with an industry expert to help you through tough financial decisions. Navigating the financial world is tough, so make it easier with FaasFunds.

Building business credit is like building trust. The more of a clean track-record you have with paying debts, the more likely you are to be trusted in the future with them. Think of it as a resume – if a resume exemplifies how well you’ve performed at previous jobs, your credit is a history of your finances, and how well you’ve paid off debts. Your lenders are your references, and they keep a trail of how well you’ve repaid them. They then report that history to compile a credit score. If you perform well at a job, it builds your resume. If you don’t, then not so much. If you have a good resume and you have a good track record with your employers, you’re more likely to get more interviews and job offers – credit works the same way. When used responsibly, it will get you approved for more – and better – loans.

Why is establishing business credit so important? It can deeply affect your potential to get funding. In an article published by the Small Business Administration, they cite that the Nav American Dream Gap Survey revealed in their 2015 study that 45% of small business owners did not know they have a business credit score, 72% didn’t know where to find information on it, and 82% didn’t know how to interpret it. This narrates exactly why learning about and establishing your business credit is so important.

Many business owners don’t understand their credit health, and it can in-turn affect the financial health of their business. Here’s our take on why business credit is so important.

Growth

Along with providing a service to your customers, growth is usually one of the top long-term goals of a business. Building business credit is important because it helps prepare your business for the future. If you want your business to grow, you have to first establish some sort of credit. Business credit is used to determine if your business is qualified for different financial products. The more credit you have, and the better that credit is, the more purchasing power you have. Your purchasing power is exactly how much you have to invest in new assets, and if you maintain good credit, it runs parallel with your company’s growth.

Business credit also increases your chances of getting financed with favorable terms. If you build your credit, you’ll receive loan amounts, interest rates and term-lengths based on it. The higher your score is, the better these terms are – you’ll get higher loan amounts, lower interest rates, and ideal term lengths. Higher business credit can also get you lower rates on insurance.

Whether it be through a business credit card, a line of credit or getting a loan, building your business credit shows that you can pay lenders back. This builds your track record, proving you’ll be able to take out more loans in the future. Thus, contributing to your business’s growth.

Net 30, Net 60 Approval

It’s not only banks that use credit. If you deal with paying by invoice, having little or no credit can make it harder for your vendors or distributors to approve you for Net 30 or Net 60 terms. Why? Because if you don’t have credit built up, they don’t have anything to go off of. Since an invoice is essentially a form of debt, if you don’t have a record of paying back your debts, they’re less likely to trust you with a new one.

Visibility

Unlike personal credit, business credit makes your business public. Only you and a few other certain parties (lenders, for example) can see your personal credit. This isn’t the case with business credit – as long as an individual or company is willing to pay for it, anyone can see your business credit score.

Since business credit is public information, customers or partners can use that information to determine if they want to do business with you. This might sound intimidating, but most of the time, people won’t want to do business with a company that doesn’t have their credit information public. If you’re not actively building and adding to your business credit score, people will see, and that could mean less business for you.

Personal Credit vs. Business Credit

According to Experian, one of the credit score reporting agencies, keeping your personal and business credit separate is vital. It’s risky to intertwine your business finances with your personal finances, but there are other actual benefits of separating them. Many lenders and creditors are leaning away from relying on personal credit when trying to judge a business’s financial health because it’s not a great predictor for a business’s behavior.

Nerdwallet also says that keeping business and personal credit separate can be highly beneficial when it comes to tax season. It makes it that much easier to track your business expenses for tax purposes, and it’s always better to be on the safe side when it comes to the IRS.

How Can FaaSfunds Help Build Business Credit?

What if you could have on-demand assistance to help you establish your business credit? What if there was a way to manage personal credit and also see how it affects your business’s financial health? FaaSfunds exists to do just that. We’re here to help monitor and make suggestions to help your business credit and navigate the complicated world of making financial decisions. Don’t be part of that 82% that doesn’t know how to interpret their business credit – let FaaSfunds help.

Term loans are about as traditional, and popular, as it gets in terms of business funding. If, as an individual, you have student loans or a mortgage, then you have a term loan. As a business, term loans work along these same lines. The stipulations – requirements, interest rates, and terms – vary between banks and online lenders. Online lenders offer convenience and fewer stipulations, but shorter terms and higher interest rates. Banks are slower and have higher qualifications, but offer longer terms and lower interest rates.

A business term loan refers to any sum of money paid back with regular payments for a set term length. They have a fixed interest rate and the term is usually one to five years. They’re typically used for one-time, larger investments – like real estate or large projects.

Business Term Loans: Do You Qualify?

Many businesses can qualify for term loans, but it depends on your credit score, financials and how long you’ve been in business what your terms will be. Your loan length, size, and interest rate will vary based on these important factors. They also might require collateral to secure the loan, and you could lose that collateral if you can’t repay it. Depending on the provider, it’s often harder for startups to get larger term loans, but there are options out there.

How to Apply

Term loans, traditionally, come from a bank. The application process from a bank will be longer and require several physical documents. They’ll usually require a meeting or two. For an online lender, like Kabbage or Funding Circle, the application process is much easier and convenient. They all require the same information, but online lenders off a more streamlined input process. Some lenders may charge prepayment penalties or other fees, so make sure you ask about them before you commit.

What you’ll need:

  • Drivers license
  • Voided business check
  • Bank statements
  • Profit & loss statements
  • Credit score
  • Business tax returns
  • Personal tax returns

What are the Different Types?

Your only options for business terms loans come from either banks or online lenders. They each offer different tradeoffs, depending on what you’re looking for and your credit health.

  • Banks offer the lowest rates, but you need to have good credit and a strong financial history. These traditional loans also take longer to apply for and receive. Getting these traditional business term loans is also hard if you have no collateral to secure them with.
  • Online lenders offer quick access to funds. They’re very easy to apply for and have looser credit and business financial history requirements, but typically have higher interest rates.

Business Term Loan Uses

Business term loans are usually used for large business investments – things that would be pretty difficult to shell out the cash for upfront, or would cut into your cash flow. Term loans are a great option for large purchases because they spread out the payments and make them easier to handle. They’re best suited for things like:

  • Equipment – computers, industrial kitchens, etc.
  • Real estate – such as a new business location.
  • Production – building a new product or beta-testing software.

The goal of getting a business term loan is to come out of it with more money than you spent on it, so it takes a lot of planning and calculation to make sure you’re going in the right direction for your business. For a term loan, like any loan, you’ll end up paying more than your purchase because of interest, but if you play your cards right, it’s almost always worth it.

What Will They Cost You?

Business term loans are one of the simpler funding methods to figure out when it comes to total repayment, but they can still have very complex terms. Here’s a run-down of how the repayment works:

If you’re trying to build an expansion onto your restaurant, you need a loan to make that large, one-time purchase happen. After you’re approved for and receive a $100,000 business term loan and after you purchase the equipment and materials and hire a contractor, you’ll most likely have to start paying monthly payments. Those monthly payments will include a 12% interest over a 10-year period. If the interest is on the principal amount borrowed and not compounded, your monthly payments will be about $933 per month. This all depends on the loan stipulations and how the interest is compounded, but it can give you a basis of how business term loans work.

What Is Amortization?

Term loans are paid in a very complicated way – they amortize. This means that each loan payment doesn’t go equally toward interest and principal amount. Early on in repayment, lenders stack on interest payments and leave payment toward your principal for later on. Through the course of the loan, these payments will start to equalize and eventually the amount to pay toward your principal will surpass the amount you pay in interest. Your monthly payment is still the same amount, only the proportion of interest to principal changes.

Lenders do this so that just in case you pay off your loan early, you’ve still paid most of your interest to the lender. This means you save less than you’d think by paying off a loan before the term is over.

At FaaSfunds, we’ll figure out if a term loan works for your business, and we’ll quickly match you up with a lender that fits your needs. We’ll connect you to the top business term loan lenders, and get you approved in as little as a day.  When you sign up with FaasFunds, we analyze your business needs and finances and figure out if a term loan is the best option for you. We’ll also link you up with an industry expert to help you through tough financial decisions. Navigating the financial world is tough, so make it easier with FaasFunds.

One of the most frustrating factors of business ownership is waiting for payment.  Many businesses use credit to sell to large customers or clients through invoices, but using invoicing can mean that funds get tied up when you need them most. A delay in payment can mean a delay in funds needed for other things. If you need the money owed to you by your customers, then you can use invoice financing as a way to purchase things in the meantime.

Sometimes called accounts receivable financing, invoice financing allows businesses to borrow money despite the money owed to them by customers. This gives businesses a chance to borrow while not having to wait for customers to pay balances in full. Invoice financing frees up time to increase cash flow and invest in growth that you wouldn’t have if you had to wait for customer payments.

Invoice financing gives you a cash advance and uses your accounts receivable as collateral. Your accounts receivable are the invoices waiting for payment by your customers. With this form of short-term borrowing, you can sell your accounts receivable in order to receive immediate funds that can be used for other expenses. Invoice financing guarantees that you’ll see the money for your unpaid invoices right away. This helps to give a more predictable cash flow to fund your monthly operations. If your business is short on capital, invoice financing can provide a quick way to access cash that you’re waiting for.         

At FaaSfunds, we understand this is a common problem for business owners. In order to help businesses with unpaid invoices, we offer invoice financing in our marketplace. By signing up, we’ll analyze your business needs and see if it’s the best option for you.   

How Do You Qualify for Invoice Financing?

If you deal with invoicing large amounts of money, your business can qualify for invoice financing. More specifically, if you have a business-to-business model of financing and outstanding receivables. The receivables act as the loan’s collateral, so instead of worrying about your business finances, lenders are more worried about if the invoices make sense for them to finance. Essentially, the lender “buys” your invoices, and then takes the money back as soon as the customer pays it. Lenders are more concerned with the credit of those you’re collecting from then the credit of your business on its own, so the maximum funds you can qualify for depends on how many invoices you have and their credit.

How Do You Apply?

Understandably, your business invoices are the most important part of invoice financing. Many lenders have online applications that allow you to directly connect your business’s accounting program. This makes the process easy to move forward with, without any complicated paperwork. The documents you’ll need are:

  • Driver’s license
  • Voided business check
  • Bank statements
  • Credit score
  • Outstanding invoices

What Will Invoice Financing Cost You?

Invoice financing can be expensive, but it’s a service fee for having the cash accessible now rather than later. Here’s a breakdown:

  • Financers typically advance 85% of the invoice and keep 15% in reserve, subject to fees until the invoice is paid by the customer.
  • They’ll also often charge a processing fee on the 15% in reserve, often around 3%.
  • Lenders will usually charge a fee for every week your customers don’t pay, often around 1% per week.
  • So afterward, when the customer pays, you receive that 15% minus the fees. These fees, essentially, are convenience fees.

Some financiers will give you 100% of your invoices, but you must pay them back over a term – often 12 weeks. This is called invoice factoring. By doing things this way, your business doesn’t wait for the customer to pay their debt, the lender will often collect directly from your customer instead. So, the notable difference is that the financer is purchasing your invoices completely and they collect from your customer directly on your behalf. To help break down the costs, here’s an example:

Let’s say you’re a florist. You have a large order for a wedding, and you invoice your customer $20,000 for all the flowers they order and give them 30 days to pay it. If you wanted to fund that invoice immediately, you’d sell it to an invoice financer. They’d pay you 85% of it, $17,000, and keep the other 15% in reserve. In 30 days, when the customer pays the invoice, they pay the $20,000 to the financer. Then, the financer deducts their fees from the money they kept in reserve – 3% of the initial invoice, or $600 – then forwards you the remaining $2,400. If the customer didn’t pay their invoice within the allotted time, the financer would most likely charge an additional 1% per week, so it’s important you get your customers to pay on time.

This can all sound very overwhelming, but that’s why we’re here. When you sign up with FaasFunds, we analyze your business needs and finances and figure out if invoice financing is the best option for you. We’ll also link you up with a industry expert to help you through tough financial decisions. Navigating the financial world is tough, so make it easier with FaasFunds.

If it were 1975 and you wanted to start or expand your business with a business loan, your only feasible options would’ve been a bank. Why wouldn’t you want to go to a bank? They’re established, they’re trusted, and frankly, that’s what everyone did. Banks are the most traditional loan provider, and in some senses, they’re the gatekeepers. But the world is changing, and convenience is key. If you know what you need and need it quickly, a traditional bank loan isn’t going to be the best option.

If you don’t know where to go, getting the right funding can be a very, very long process. The internet changed everything, and in recent years it’s gotten much easier to get a business loan without going to a bank. This disruption of the industry is good for you, as a business, because now getting funded is a much easier process than in the past.

Not Your Grandfather’s Loans

For banks, time is not of the essence. They have long application processes that aren’t streamlined, and you often have to schedule meetings with a local branch to discuss your application and qualifications. Fundamentally, they’re slow. Getting a business loan with a bank takes anywhere from 14 to 21 days, so if you need to buy products as soon as possible, bank loans won’t cut it.

If you’re not really sure what’s best for your company, the process of getting a business loan will be even longer. If you’re purchasing equipment or goods that you need quickly – finding what you need to buy, figuring out how much it’s going to cost, and then getting the loan you need for it – this entire process could take days, even weeks. It’s our mission at FaaSfunds to figure out the type of funding you need, so you don’t need to wait around for your money.

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If you don’t know about online lenders, you need to.  They’re not just for mortgage loans or refinancing, they can also help you get a business loan. Online lenders take the place of a bank by way of giving you the money you need, but they specialize only on loans. Banks offer several different services, so they’re not as worried about securing your loan.

Online lenders like Clicklease or BlueVine have streamlined applications that you can connect straight to your business bank account and submit documents online. You often hear back on the same day you submit an application and can receive funds in about two to three days if you’re approved.

Whether you need to buy industrial equipment or you just need cash for general operation, there are certain types of loans from online lenders that will work better for specific needs. FaaSfunds will help you figure that out. If you need cash fast, however, you can get a working capital loan or take out a line of credit.

Working Capital Loans

Working capital loans do exactly what they say – they give you working capital. These “quick cash” loans often don’t require credit checks or waiting time. If you need cash quickly, this option will get you what you need usually within 24 hours. Working capital loans are good if you really, really need them – such as if you have an event approaching and you found out you’re short on funds to host it. If you know the event will bring in a large crowd and you can pay the quick-cash loan off with the funds earned from it, it can be a good idea.

Working capital loans are designed specifically for short term uses. If you have seasonal revenue or other such needs, they can be very useful. If you need a more long-term solution and won’t have the money needed to pay it back quickly, it’s not usually the best option. Working capital loans will loan you the money even if you don’t have good finances, but they usually require daily payments and have high interest rates. So, it’s best to use them as a last resort after you’ve really thought through your options. They do come in handy, they’re just not advised for many situations.

Lines of Credit

A more advisable option, although it requires a little bit of planning ahead, is a line of credit. You can get a line of credit at a traditional bank or at an online lender, but as we’ve talked about, online lenders will give you the quickest turnaround. Getting one is a little quicker than a traditional loan, and once you have it, you can save the funds to access at any time. Lines of credit, as their name implies, are credit lines with a set maximum very similar to a credit card. Your business will get a maximum, say around $30,000, and you draw from those funds for business expenses. They’re ideal because you only need to pay interest on the funds you use, and you only pay back what you use.

Lines of credit will take a little more information to get approved for, and better credit. They’re not as quick as working capital loans, but often lines of credit can be a quicker option because once you get one, the funds are open for use whenever you need them. Since you only pay interest on what you spend, they’re a more ideal option for emergency funds. If you’re able to plan ahead and take out a line of credit before you actually need the cash, you can use it when you get in a bind an avoid the high interest rates that come with working capital loans.

We know there’s a lot of options and information out there, and that’s why FaaSfunds offers advice for your financial questions and situations. Make sure you talk to your FaaSfunds financial advisor about lines of credit and working capital if you’re in need of quick funding. Our advisors will work with you to figure out the funding option that will fit your company.


Words can weapons – “the pen is mightier than the sword,” as they say. Sometimes through confusing financial jargon, certain words can lead to uninformed consumer decisions. When banks or financial institutions make their funding options hard to understand, they create a disadvantage to their customers. They throw around terms and concepts without ever explaining what they mean, and not everyone has an MBA or the time to research it all.

If you’re trying to get a business loan or receive any sort of funding for your business, all of the financial jargon and literature can get overwhelming. There are terms you hear over and over again, but never actually see defined. There are words that mean multiple things when used in different ways. Not to mention the words that sound complicated but actually mean simple things. We’re here to break down some of these complicated terms in an understandable way.

Here’s our glossary of some common financial jargon:

Accounts payable vs. accounts receivable:

Accounts payable are the debts that your business owes to vendors or creditors, while accounts receivable are the money owed to your business by your customers. This type of credit is done through invoicing and is always short-term.

APR:

APR stands for the annual percentage rate, and it’s the total rate charged for borrowing money from a lender. It includes the interest rate and all fees associated with borrowing. It’s expressed as a percentage that represents the annual cost of funds over a loan term. It does not, however, take into account compounding interest.

((Fees + Interest/Principal)/Number of days in a loan term) x 365) x 100

Broker:

A broker is a middle man within any type of sale. For houses, a broker is a real estate agent – they sell the product on behalf of another person or entity. Brokers facilitate sales for a client or investor, and they often charge a commission on the things they’re selling.

Cash flow:

Cash flow is the money your business is bringing in. the ability of a business to create value is determined by its ability to create a positive cash flow, and this is reported on a cash flow statement. Cash flow is used to access a company’s overall financial performance.

Collateral:

Collateral is what you use to secure a loan, and you pledge it as security of repayment. Not every lender needs collateral, but often when they do, they’ll require things such as investments, property, cars or savings deposits. If you don’t pay your loan, they’ll seize your collateral as payment.

Compounding Interest:

Compounding interest is the calculated interest from the principal amount along with the accumulated interest of a loan. It can be compounded after various periods of time – annually, semi-annually, monthly, quarterly – and will make the sum of your loan grow at a faster rate than simple interest, which is just calculated from the principal amount. If you compound a $10,000 loan quarterly at 5%, you’ll be paying not only on the $10,000, but also the 5% interest it accumulated after every quarter.

Credit

Credit is borrowed money that you use to purchase things. Loans are credit, and credit cards give you access to credit. As opposed to cash, credit is money you don’t actually possess, but pay back at a later time.

Credit score:

Your credit score is a statistic that evaluates how worthy you are of credit based on your history with it. They range from 300 – 800, with a score of 700 and up considered “good.” Credit is your ability to buy things before you use actual cash. Your credit score takes into account all of the loans and credit cards taken out in your name and scores you based on how well you pay on them. They also score based on how intelligently you use them – such as if you pay more than the minimum. This score is what other credit and loan providers use to decide if they’re going to give you money. If you have a good score, they know you’re more likely to pay them back.

Fixed asset:

Fixed assets are a tangible property that businesses use in operation. Fixed assets generate income for a company, and aren’t expected to be used or sold for cash within a year. Fixed assets include things like buildings, computer hardware or vehicles.

Guarantor:

A guarantor is a person who guarantees something will be paid. For loans, it’s a person who co-signs with you in order to assure the lender they’ll be paid. In the event that you are unable to make a payment, your guarantor takes on the responsibility. They pledge their own assets in case you cannot pay what you’re obligated to by the lender.

Loan term:

A loan term is the period of time your business has to pay off a loan. During a loan term, the payments are set up to be paid however often the loan is designed for. For example, if you get a $10,000 loan, your loan term might be 24 months paid monthly, so you’ll be paying about $417 per month during your loan term of two years.

Prime rate:

The prime rate is the interest rate that commercial banks charge their customers with the best credit. It’s largely determined by the federal funds rate set by the government. It serves as a base to determine most interest rates for borrowers.

Principal:

Your principal amount is the starting amount of your loan, and id usually the amount of money you receive.

Working capital:

Working Capital is the difference between a company’s current assets (cash, accounts receivables, inventories, etc) and their expenses or liabilities. It’s the amount of capital a business is operating on, and if its assets are less than its liabilities, the business has a working capital deficit.

Assets – liabilities = working capital

Underwriting:

An underwriter determines if a business gets a loan. The underwriting process is what a business goes through to get a loan. An underwriter assesses the risk a business may be to a financial institution and determines whether or not they are worth lending to or not, based largely on their credit history and financial health.

Unsecured vs. secured loan:

Secured loans require collateral in order to receive them. Unsecured loans do not require collateral, but will often require a better credit history.

FaaSfunds helps you out with all this complex information, and shows you all the things you need to know when it comes to getting a loan. Reach out to us today to learn about the best funding options for your business. Don’t let the banks confuse you – get FaaSfunds.

Equipment financing is used specifically for large equipment purchases – like industrial kitchens, company vehicles or even party inflatables. Getting an equipment loan is usually the most convenient way to purchase new equipment for your business. Usually, it’s an inevitable purchase – if your equipment is outdated you need to update it, or if you’re starting a business, you certainly need equipment. Getting a loan makes those purchases just a little bit easier.

You use equipment financing loans the same way an individual would use a car loan. You receive the sum of the loan upfront and then pay it back via monthly payments. New equipment can help your business bring in more revenue – whether it be a van to help deliver catering or another oven to meet higher demand. Handing over the cash for these purchases can set you back significantly, and that’s what makes equipment financing an attractive option for expanding, starting or updating a business.

If you’re going to a large equipment vendor, like John Deere, they’ll usually offer in-store financing for your business. Smaller or less-broad vendors will not, so you have to go through a bank or other lender to get the funds you need to pay the vendor up-front.

Do You Qualify for Equipment Financing?

Most businesses in good standing can qualify for equipment financing loans. Since the equipment you’re financing acts as the collateral, these loans can be easier to secure if your credit is less than stellar. Lenders are interested in securing a loan, so when you’re financing equipment, they’re often not as concerned with your borrowing history because if you can’t pay the loan back, they’ll just seize the equipment. This way, they don’t lose any money, so they’re more likely to be a little generous with their lending. The details of how much the loan will be for and for how long depends on the type of equipment and how much it costs. If you plan on investing in a piece of equipment that will retain its value with time, then lenders will often be willing to work with you, even if you don’t have the best finances.

Be aware that the term length depends on the type of equipment and its expected lifetime. Most lenders will not extend the loan payments past the lifetime of the equipment – they want it to be a tangible asset that’s worth something should they have to repossess it.

How to Apply

Like most loans, you’ll need to provide the financial health of your business along with your credit score. Most equipment lenders will also ask for information about the equipment you’re looking to buy and a quote of how much it will cost. The documents you’ll need are:

  • Driver’s License
  • Voided business check
  • Bank statements
  • Business tax returns
  • Credit score
  • Equipment price quote

What’s the Difference Between Equipment Financing and Equipment Leasing?

Some equipment sellers offer the option to lend equipment directly to their customers and charge a monthly rental fee, much like renting an apartment. With this option, you can only use the equipment while you’re paying for it, and no matter how long you use and pay for the equipment, you don’t own it. This is a good option if you only need equipment – like a forklift or a van – for a shorter period of time.

If you chose to finance equipment with a loan, you’ll own the equipment when you’re done paying for it. If you know your business will need the equipment for a while, financing with a loan is usually a better investment.

What Will Equipment Financing Cost You?

The appeal of equipment financing is that it doesn’t require you to pay the steep price for equipment upfront. It gives you a way to pay it off in increments. Because of the interest generated by getting a loan, you inevitably end up paying more for the equipment than it actually costs. Part of this is an investment – if you choose to finance the equipment you really need, then you’ll receive more output and money because of it. Part of it, however, is the fee you have to pay for convenience – lenders are making this money more accessible to you, and expect you to pay them for it.

To help break equipment financing down, here’s an example: Let’s say your restaurant needs a new set of dining-room furniture. The expected price of this new furniture is around $12,000 total for all the tables, chairs and booths. After you get approval from a lender, you use that money to purchase the furniture and agree to pay 12% interest back to the lender, along with the money from the loan. Because technology doesn’t improve very quickly when it comes to dining furniture (like it does with computers), the value of the furniture isn’t expected to depreciate significantly over the next few years, so the lender gives you five years to pay the loan off.

$13,440 is the total amount you’ll have to pay back, making your monthly payments $224 for five years. After it’s paid off, you own all the furniture.

Things to Consider

In order to know if equipment financing is the best option for your business, you have to understand your business financials and opportunity costs. If you planned for these costs or have the money on hand,  sometimes it’s worth it so you don’t have to pay the extra money in interest. It’s also an option to wait and save the money, but if you need the equipment immediately, saving isn’t really an option. For many new or small businesses, handing over $12,000 in full isn’t a possibility. It will set them behind significantly, and hinder their ability to start or grow their business.  

This can all sound very overwhelming, but that’s why we’re here. When you sign up with FaasFunds, we analyze your business needs and finances and figure out if equipment financing is the best option for you. We’ll also link you up with an industry expert to help you through tough financial decisions. Navigating the financial world is tough, so make it easier with FaasFunds.