Skip to content
EXCEL CAPITALMANAGEMENT
515 N Flagler Dr, Suite P300
West Palm Beach, FL 33401
Talk to our team877-880-8086
Get Funded

Small Business Financing

Recourse vs. Non-Recourse Factoring: What’s the Difference?

by
Two business professionals reviewing folders labeled Recourse and Non-Recourse beside invoice paperwork.
Two business professionals reviewing folders labeled Recourse and Non-Recourse beside invoice paperwork.
Compare the fees, coverage, and responsibility for unpaid invoices. AI-generated editorial image, not Excel staff or customers.

Understand the costs, the protection, and what happens when a customer does not pay.

The key difference

Who is responsible when your customer does not pay?

Recourse factoring lets the factoring company look back to your business for payment under the agreement. Non-recourse factoring transfers specified customer credit risk to the factor. It does not automatically transfer every risk attached to an invoice. [1][2]

Start with three questions: What will you receive now? What will it cost? What happens if the customer does not pay?

01 / Understand the tradeoff

Recourse vs. non-recourse factoring at a glance

Waiting on an invoice and worrying that it will never be paid are two different problems. A factoring offer can address the first without fully protecting you from the second.

With invoice factoring, a business sells a receivable to a factoring company. The customer that owes the invoice is often called the account debtor. The factor may handle collection as part of the arrangement. [2][3]

Same invoices. Different risk.
Compare the contract, not just the label.
What changes?RecourseNon-recourse
Unpaid invoiceThe business may face a chargeback.The factor takes the credit risk specified in the agreement.
PriceOften less expensive.May cost more for defined protection.
AdvanceDepends on the offer.Depends on the offer.
DisputesCheck seller obligations.Not automatically covered.
Before signingWhen can an invoice be charged back?What exact event triggers protection?
Read both offers side by side. A bigger advance and broader credit protection are different benefits. One does not establish the other. [1][3]

The comparison is a reading guide, not a statement that every factor offers identical terms.

What is recourse factoring?

With factoring with recourse, your business retains responsibility for an unpaid receivable under the agreed terms. A contract may require repayment, an eligible replacement invoice, or an adjustment to reserves or future funding. The label alone does not tell you the deadline or the dollar amount. [1]

That deadline matters. When reviewing an offer, write down whether it is measured from the invoice date, the due date, or another event. Then ask what notice you receive and how a later customer payment is handled. Keep an accounts receivable aging report beside the quote so you can compare outstanding invoices with its chargeback deadlines.

Follow the invoice and the money
A simplified recourse factoring arrangement.
1Invoice your customer

Goods or services are delivered.

2Submit for approval

The factor reviews the receivable.

3Receive the advance

The offer sets any reserve.

What happens at collection?
Customer pays the factor

The remaining reserve is settled after fees and other agreed adjustments.

Invoice stays unpaid

The agreement determines any repayment, replacement, or reserve deduction.

These are alternative outcomes, not consecutive steps. Check the agreement for the timing and amount of a chargeback. [1][2]

What does a factoring chargeback mean?

A chargeback in this context returns responsibility for a receivable to the seller under the factoring agreement. It is not a cardholder disputing a credit-card purchase. Ask the factor to show how the adjustment would appear on your account statement. [1]

For planning purposes, do not assume the withheld reserve is the most you could owe. Request a worked example using one of your own invoices, including any fees and the treatment of money collected afterward.

02 / Read the protection

What is non-recourse factoring?

Non-recourse factoring, also called factoring without recourse, shifts defined customer credit risk to the factor. Protection may depend on an approved customer, an eligible receivable, and a qualifying reason for nonpayment. Some agreements cover insolvency but not an ordinary overdue invoice. [1][2]

The practical question is not “Is this non-recourse?” It is “What would make this invoice protected, and what would leave it outside the protection?”

Non-recourse is not all-risk protection
Use this checklist to read the actual coverage clause.
Confirm what is included
Defined insolvency eventsWhich customer credit events qualify?
Approved invoices and limitsDoes this invoice fall inside the protection?
Waiting periods and deadlinesWhat must happen before a loss is covered?
Do not assume these are covered
Service or invoice disputesDisagreement is not the same as inability to pay.
Returns, credits, or deductionsCheck responsibility for a reduced invoice.
Fraud or documentation problemsReview the seller’s promises and exclusions.
Ask for a written answer: “Would this specific invoice and this specific reason for nonpayment qualify?” [1][2]

Compare the reason for nonpayment

Imagine two customers owe the same amount. One cannot pay because its business has failed. The other says the goods were defective and refuses to accept the invoice. Those situations need separate answers in your contract review.

Use the same approach for a missing purchase order, a credit memo, or a partially disputed invoice. Ask whether the problem makes the entire receivable ineligible or only affects the disputed amount. Do not rely on a sales summary to answer that question.

A useful protection clause should tell you which customer, which invoice, which event, and which amount it covers.

03 / See the numbers

Recourse and non-recourse factoring: a $20,000 example

Suppose a staffing business has a $20,000 invoice for completed work. It wants cash before the customer pays and is comparing two offers.

Teaching assumptions: Both offers advance 90%. The customer pays in full on day 30. The recourse fee is 2% of the invoice and the non-recourse fee is 3% for that same period. There are no additional fees, credits, deductions, or other reserve holds. These figures are invented for illustration.
One $20,000 invoice. Two hypothetical offers.
Same advance and payment date, different assumed fees.
Recourse example
Initial advance90% of $20,000$18,000
Reserve withheldNot a fee$2,000
Assumed fee2% of the invoice, paid on day 30$400
Reserve released$2,000 less the fee$1,600
Total receivedAdvance + reserve released$19,600
Non-recourse example
Initial advance90% of $20,000$18,000
Reserve withheldNot a fee$2,000
Assumed fee3% of the invoice, paid on day 30$600
Reserve released$2,000 less the fee$1,400
Total receivedAdvance + reserve released$19,400
$200 difference in this example. The figures show the cost when the customer pays, not the result of a default claim. Invented teaching assumptions, not Excel pricing or market averages.

Arithmetic: $18,000 + $1,600 = $19,600; $18,000 + $1,400 = $19,400. The reserve is money withheld initially, not an additional charge.

Now change the outcome, not the invoice

Customer pays

The example settles as shown

The business receives $18,000 first, followed by the reserve release. The non-recourse offer costs an extra $200 under these assumptions. No default protection has been used.

Customer pays late

Recalculate the fee and timing

The day-30 figures no longer tell the whole story. Ask whether fees continue, whether a chargeback deadline applies, and what happens to a payment received after that deadline.

Customer becomes insolvent

Check whether the event qualifies

For a non-recourse offer, confirm that this customer and invoice were covered, the event meets the definition, and all conditions were satisfied. Do not assume the example guarantees payment of the full $20,000.

Customer disputes the work

Review the seller’s obligations

Ask each provider to explain how an invoice dispute changes the result. A protection clause for customer credit failure should not be treated as an automatic answer to a service complaint.

Compare factoring fees over the same payment period

Factoring costs can depend on how long an invoice remains outstanding. Comparing two headline percentages without their fee periods can give you the wrong answer. [3]

For a second hypothetical example, suppose an offer charges 2% for the first 30 days and another 1% for the next 15 days. On a $20,000 invoice paid on day 45, those assumed charges total $600, not $400. An offer charging a flat 3% through day 45 would also cost $600 before other charges.

For each quote, request a dollar-cost example at your customers’ expected payment dates. Include any minimum charges, setup or transfer fees, reserve rules, and termination costs that appear in the agreement. Mark anything not specified as an open question rather than treating it as zero. To put those payment dates in context, review how to calculate your accounts receivable turnover.

Keep the two comparisons separate: compare cash and fees when the customer pays, then compare contractual responsibility when it does not. A lower price does not make an exclusion disappear.

Business team reviewing an invoice and a checklist covering customer approval, payment terms, coverage, fees, and reserves.
Compare customer approval, coverage, payment timing, and fees in the same review. Illustrative business scene, not a photograph of Excel staff or customers.

04 / Make the decision

Which option makes sense for your business?

Use the following questions to organize the decision. They are not a substitute for reading the offer, and they do not make either structure the automatic winner.

How much could you absorb?

Take the largest invoice you expect to factor and place a potential chargeback next to the same week’s payroll and supplier obligations. Would the business still have room to operate? Run the exercise for more than one unpaid customer, not only your average invoice.

Is the protection relevant?

Write down the nonpayment scenario you are trying to protect against. Then find the clause that addresses it. Paying more for insolvency protection may not solve a problem caused mainly by customer disputes or missing paperwork.

How concentrated are your invoices?

Consider a business with ten similar customers and another with one customer representing half its receivables. They may view the same offer differently. Ask how customer-level limits would affect the invoices that matter most to your cash flow.

What is the cost of the restriction?

Look beyond the quoted fee. Consider an invoice that cannot be funded, a reserve released later than expected, or a contract that is difficult to leave. Put those terms beside the protection, rather than evaluating each in isolation.

A sensible comparison ends with a written explanation of the cash you receive, the cost over your payment cycle, and the obligations you keep.

What to ask recourse and non-recourse factoring companies

Send the same questions to each provider. Ask them to reference the relevant contract clause and use the same sample invoice.

  1. What exactly triggers a chargeback?Request the deadline, notice process, calculation, and permitted ways to resolve it.
  2. What does “non-recourse” cover here?Ask for the precise credit event, eligibility conditions, exclusions, and any waiting period.
  3. Is approval also confirmation of protection?Ask whether an approved invoice is covered and what amount or customer limit applies.
  4. When is the reserve available?Have the provider explain fees, adjustments, and any circumstances that delay release.
  5. What happens if the customer pays afterward?Confirm how later collections, prior chargebacks, and additional fees are reconciled.
  6. What do the other contract terms require?Review minimum volume, exclusivity, renewals, notice periods, and exit charges.
  7. What security or guarantees are required?Ask your attorney to explain any UCC filing or lien, guarantee, or seller representation before signing.
  8. What will my customer experience?Confirm payment instructions, collection communications, and who handles disputes.

This is an educational comparison checklist, not legal or accounting advice. Have your attorney and accountant review the actual agreement and its treatment for your business.

How the comparison applies across industries

The same questions can be applied to a staffing invoice for completed shifts, a wholesaler’s accepted shipment, a manufacturer’s delivery, or a professional-service invoice. A freight invoice is another application, not the definition of the product.

Choose examples that resemble your own receivables. In each case, ask what evidence establishes that the customer owes the amount and what the factor needs before purchasing it. For the broader product overview, read Excel’s invoice factoring guide.

Frequently asked questions

Is factoring without recourse the same as non-recourse factoring?

Those labels commonly describe the same broad structure. The wording is not enough to compare offers. Read the coverage definition and the seller obligations in each agreement. [2]

Does non-recourse factoring mean I receive the entire invoice upfront?

No. The advance and any withheld reserve are separate from the allocation of credit risk. The example above deliberately uses the same 90% advance for both offers so you can compare the assumed fees.

How do I decide whether non-recourse protection is worth the extra cost?

Identify the loss you need protection against, confirm it is covered, and compare the additional cost with the obligations and limits that remain. Use an actual invoice and your own cash-flow needs rather than a general “best option” ranking.

Can a small business use this comparison?

Yes. Start with the invoices you actually issue and the customers that pay them. Whether a provider accepts your business is a separate question from whether its proposed coverage addresses your needs.

Is invoice factoring the same as invoice financing?

Not necessarily. Factoring generally involves selling receivables, while invoice financing may involve borrowing against them. Ask what transaction is being offered and how collections, repayment, and costs work. [3]

Can I apply this guide to recourse and non-recourse loans?

This guide compares invoice factoring agreements. Do not use its examples to decide the obligations under a mortgage, equipment loan, or other loan agreement. Have the specific financing contract reviewed separately.

Explore the product

How much funding can you use?

Start with the invoices you have, the customers behind them, and the timing of your cash needs. Explore Excel’s invoice factoring information before discussing a specific offer.

Explore invoice factoring →

Sources and further reading

  1. altLINE, The Southern Bank: Recourse vs. Non-Recourse Factoring
  2. U.S. Department of Commerce: Trade Finance Guide, Export Factoring
  3. U.S. Chamber of Commerce: Understanding Factoring Receivables
  4. International Finance Corporation: Knowledge Guide on Factoring Regulation and Supervision

The Department of Commerce guide discusses export factoring; it is background, not a promise that a domestic agreement has the same terms. IFC is broader industry background. Provider explanations do not replace the agreement offered to your business.

What are the 4 C’s of Credit For Getting a Business Loan?

by
The 4 Cs of Getting a Business Loan | Excel Capital Management

You’re probably already aware that your credit score plays an important role in determining your eligibility to obtain a business loan or line of credit and that’s why it’s more important than ever to know what the 4 C’s of credit are.

However, what most don’t know about the 4 c’s of credit is what specific factors lenders look for within that overarching category.

When determining your eligibility for a loan, lenders look for what are called the ‘4 C’s of credit’ and, in fact, they stretch beyond just your credit score.

The number and type of factors vary somewhat depending on the lender, however, the four C’s of credit were created to help simplify and clarify the loan process for small business owners looking to obtain a loan.

It can be looked at like a guiding light to help understand what lenders and other funding companies look for when evaluating a business for credit

What are the 4 C’s of Credit?

The 4 C’s of credit are as follows – 

4 c's of credit

Collateral

Typically appearing in the form of property or other physical assets, collateral is any asset a borrower can offer to secure a loan.

If the borrower defaults on the loan, the assets they used as collateral can be seized. Many small business owners are wary of secured business loans because of this reason as they require hard collateral that is tied to your personal assets.  Many business owners are and have the right to worry about crossing the line between business and personal. Making a business mistake shouldn’t  have to affect your personal assets.

Fortunately, unsecured business loans often don’t require collateral, and if they do, it’s a form of ‘limited’ collateral such as a portion of business sales which isn’t required to be paid back if you go out of business, meaning the risks are much lower.

Capital

Capital refers to any business asset that can be sold to make loan payments. This includes available money and cash savings, investments, properties with equity, and other assets that you could sell or use to quickly obtain cash.

If business drops off and you’re unable to pay your loan payments for a time, lenders want to see that you have liquidity to cash out on so you can continue to make payments on time.

Capacity

Capacity refers to your business’ ability to make the revenue needed to pay back a loan.

Lenders don’t just want to see that you have assets you can use to pay off a loan (or which they can secure to do so), they want to see a history of being able to make regular payments regardless of those assets.

 

Character

The final ‘C’ in the 4 C’s of credit, lenders determine character by reviewing the borrower’s personal credit history and calculating several factors together.

Factors taken into account include:

  • Your total amount of debt
  • Delinquent accounts
  • Available credit
  • And whether you make payments on time

If you’re in need of a small business loan but don’t believe you can satisfy all four C’s of credit, don’t worry, there are several other options available. Now that you know what the four C’s of credit are you can easily understand how to prepare yourself and your business when you try to pursue a lender for any sorts of funds.

At Excel Capital, we provide a variety of financial solutions which we can offer even if you have bad credit.

Click here to complete our short application to get in touch with one of our financial specialists to see how we can help.

TrakLoans: How They Can Help Your Small Business

by
TrakLoans: How They Can Help Your Small Business | Excel Capital Management

As a business owner, you understand the importance of having the working capital necessary to grow your business and achieve success. Whether business is booming and you need capital for inventory purchases, expansion, new hires, and training, or you run into some cash flow issues over time and need it to these problems, most businesses will apply for funding at some point. You’re probably a little familiar with many of the alternative funding solutions we offer such as Merchant Cash Advances, Business Lines of Credit, Term Loans, and more, but now, we’d like to introduce to you the TrakLoan.

TrakLoans are a flexible, cash-flow friendly way to access small business capital fast. These loans work particularly well for businesses whose owners value having the amount they remit fluctuate with their daily payment card receivables. TrakLoans are also a stress-free funding solutions because instead of sending a large payment amount once a month, a flat percentage of your business’ credit and debit card sales are automatically remitted on a daily basis. That being said, a larger payment amount is only sent on busy sales days rather than slower days. Additionally, these types of loans have no maturity date and no fixed payment amounts. Thanks to this process, business owners can stay 100% focused on growing their business rather than repaying a loan. There are no checks to write or harassing phone calls coming to your business. The payment process stops automatically once the TrakLoan is repaid in full.

To add to the benefits, unlike traditional banks and lenders, alternative financing companies, such as Excel Capital Management, that offer TrakLoans have minimum qualification requirements. All that is required to get started is a completed one-page application form. No personal collateral is needed to qualify, and poor credit is not a deal breaker. For more information on TrakLoans,  APPLY NOW!

An ACH Loan Could Be The Perfect Funding Solution for Your Business

by
ACH Cash Advance or ACH Loan for Your Bar or Restaurant

Deciding if an ACH Business Loan is right for your business:

Applying for funding for your business can be quite daunting. Do you go the traditional bank loan route or work with an alternative lender? ACH Loans make Funding Quick and Easy

Well, traditional bank  financing can be quite tedious, tiresome, and unfortunately, not always the best solution.

Alternative lenders like Excel Capital Management can offer better funding products depending on your business’ needs such as an ACH Business Loan. Let’s take a closer look at how ACH  Loans work and how one could benefit your business.

What Are ACH Loans?

money exchange | Excel Capital Management

To start, the primary purpose of an ACH Business Loan is to service the working capital needs of small to medium-sized business owners. They are a popular funding solution for businesses that do not accept credit cards or want a set repayment schedule.

Whether you need the working capital obtained through an ACH Business Loan for inventory purchases, new hires, employee training, additional office space, or almost anything else for your business, this funding solution can be extremely beneficial.

Unlike traditional business loans, funds from  ACH Business Loans are disbursed in as little as one business day after being approved for funding.

Additionally, this funding product does not require a minimum credit score to qualify, which means many up and coming businesses or businesses experiencing a rough financial period. Having collateral is not necessary to qualify, so business owners who have poor credit or lack business history can still apply for this great funding solution.

Lenders use the ACH (automated clearing house) system provided by many banks to set up automatic recurring payments to collect payments. This is the main set up for Unsecured Business Loans.

Payments are usually remitted via daily or weekly ACH’s and provide micropayments instead of one large payment due at the end of every month.  This ACH loan process reduces the risk for many higher-risk industries such as restaurants, car dealerships and trucking. Allowing alternative lenders to provide restaurant business loans, Cardealer funding and truck financing when most other traditional banks would not consider funding.

What Can an ACH Loan Be Used For?

cash 3 | Excel Capital Management

The great thing about ACH Loans is that they are a funding solution that can be used for businesses in all industries and for virtually anything as long as it pertains to the business itself. Here are some common uses of working capital acquired through an ACH Business Loan:

Business Permits & Licenses – Depending on your industry and state of operation, your business may be obligated to obtain and display certain permits and licenses. Renewing these documents can be costly, but are necessary since not having the proper documentation at any point of operation can cause major legal issues in the future.

Office Space & Business Locations – Maybe you need an office space or facility in order to properly operate. Business capital can be used to acquire new space or to improve and expand an existing location.

Inventory Purchases – Business capital acquired through an ACH Business Loan can be used for bulk inventory purchases so there is never a shortage of goods and products. Often times, purchasing inventory in bulk has it’s benefits and is much cheaper than individual purchases.

Marketing & Advertising –  Website development, paid ads, and social media marketing is a big job, and hiring a team of professionals can be pricey. Having enough business capital in order to cover these expenses can help tremendously.

Research & Development – Constantly developing your products, goods, and services is essential for staying ahead of the competition in your industry. Additionally, doing the proper market research and analyzing your target audience and consumers is key to knowing what your customers want. Business capital can certainly be used to help fund this process.

Product Manufacturing – Similar to research and development, product manufacturing may be a constant need depending on your industry and business capital may be needed during slow periods or when business is so great, that you must quickly meet the demand.

Employee Hiring & Training – Consider using the capital obtained through an ACH Business Loan to hire additional employees or to train existing staff on new business operations.

How are ACH Business Loans Paid Back?

The process of collecting payments on an ACH Business Loan is typically done through the Automated Clearing House (ACH) withholding method with fixed daily, weekly, or monthly payments. Lenders are able to withdraw a predetermined amount from you business’ bank account. The less common, but just as efficient, method is through a lockbox agreement. This process is a little more involved as all of a business’ daily credit and debit sales are deposited into a lockbox account with the lender withdrawing a predetermined repayment amount.

Deciding if an ACH Business Loan is Right for You

paperwork 2 | Excel Capital Management

Many business owners feel ashamed when it comes to applying for some sort of financing, but not to worry. Almost all successful businesses have reached out for additional working capital at one point or another. In fact, many businesses that are doing incredibly well obtain additional working capital through a business loan for continued growth and expansion. Here are a few steps to take in order to decide if an ACH Business Loan is right for you.

Identify Your Business’ Needs – First things first, why does your business need a loan in the first place? Sit down with your core staff members, financial advisors, or simply yourself to determine your business’ needs and how a quick business loan could help. Do you need to purchase inventory, hire additional staff, catch up on bills? Having a plan of execution once the loan is acquired is essential for success, as well as a plan for paying the loan back.

Do the Due Diligence – You may hear the phrase, “do the due diligence” a lot when researching quick business loans. In simpler terms, this means doing the necessary research before applying and accepting an offer with a lender. There are thousands of lenders and brokers out there – traditional and alternative. Don’t take everything at face value. Learn as much as you can about each lender you are interested in, compare pricing, read reviews, ask questions, and follow your gut if something just doesn’t seem right. You have the right to protect yourself and your business. The last thing you want to do is put your business in more of a financial bind or have setbacks. Research and knowledge is key. Do your due diligence.

Choose the Best Quick Business Loan Option – Maybe you did this when identifying why your business needs a quick business loan, but it’s a good idea to confirm again the type of loan product your business truly needs. Could your business benefit from an SBA Loan, Term Loan, Startup Loan, or something else? Speak with your chosen lender to go over all of your options and get a better understanding of how everything works.

Find Out What’s Needed To Qualify and Apply – All lenders have different business loan qualification guidelines. Depending on your business’ financial standing the amount of money you are looking to obtain, the documentation needed to be presented with an approval will vary. It is a good idea to at least have your last six months of business bank and credit card processing statements available, as well as additional financial documents like P&L and Balance Sheets and tax returns easily accessible.

What is the Application Process for an Ach Loan Like?

loan application | Excel Capital Management

Typically, most lenders that offer ACH Loans require minimal paperwork in order to present your business with an offer and approval. As mentioned, your business’ bank account can even be funded in as little as three business days! Here is a list of items to have ready when applying:

  • Completed application provided by your chosen lender
  • Four months of recent business bank statements
  • Four months of recent credit card processing statements (if your business accepts credit cards)
  • Clear copies of identification for all business owners
  • Voided check for the business bank account that is to be funded

*additional documentation may be requested prior to funding*

 

How An ACH Loan Can Help Your Restaurant or Bar:

While it is a trendy and thriving industry, owning and operating a bar or restaurant isn’t so simple. The business is constantly growing, changing, and will forever be one of the most competitive. These issues on top of the fact that business owners of all kinds will inevitably run into some financial hurdles overtime can be overwhelming to think about. So what do you do when your bar or restaurant is in need of working capital to fix cash flow issues? What do you do when the traditional big banks decline your business loan application? There are options. Introducing the ACH Cash Advance and ACH Loan or Unsecured Business loan.

As mentioned, all business owners will be in need of working capital at some point over their business’ lifetime. Whether additional funds are needed to fix your bar or restaurant’s cash flow issues during a slow period, train new wait staff, hire more bartenders, purchase inventory, or repair kitchen appliances, A quick Business loan can help.  Two popular reasons many bar and restaurant owners reach out for capital is due to the turnaround of employees and the fact that their business may be cyclical.

For instance, employees in the bar and restaurant industry do not tend to stay at a job very long due to constantly looking for additional or better work opportunities. It’s a fast paced industry that many work in on the side to make extra cash. The causes many issues for business owners who can’t compete with other bars or restaurants that pay better. Additional capital could help you to give deserving employees a raise or promotion. Similarly, many bars and restaurant are cyclical, meaning they are open 2 to 4 days per week. Thus, generating enough revenue to pay rent for the business and cover expenses and payroll can be tough.

To acquire working capital from a traditional bank via a business loan is no easy task. BIg banks require lengthy applications, lots of paperwork, and tend to take a few weeks for processing and an approval or decline. Not to mention, due to the unsteady industry, an approval can be even more difficult to receive. (Check out our recent blog, “Why Business Loans Declined For 3 Reasons” for more on that).

Luckily, alternative financing is available, and the most popular financing solutions tend to be the Merchant Cash Advance or ACH Loan. The primary purpose of a Merchant Cash Advance or ACH  Loan is to service the financial needs of small to medium sized business owners. Unlike traditional business loans, funds from a cash advance or ACH Bank Loan disburse in as little as three to four business days. They do not require a minimum credit score to qualify, therefore, many rising businesses or businesses that run into a rough patch over the years opt to use this financing solution.

Another benefit is that Merchant Cash Advances or ACH Bank Loans do not require any collateral to qualify, so business owners who have little to no collateral (or poor credit or limited business history) to offer can rest assured that nothing will be taken from them. Finally, since ACH Cash Advances and ACH Bank Loans do not necessarily have fixed payments, business owners who run into financial troubles over time do not carry the burden of large monthly payments, balloon payments and do not accrue over time (since they are classified as a purchase of future sales at a discount).

When it comes to paying back your ACH  Cash Advance or ACH Loan, there are two common collection processes. With a Merchant Cash Advance, payments come from a set percentage of credit and debit sales. With  ACH Loans (this financing product is typical for businesses that do not accept credit cards or want a set repayment schedule) the collection process is done through the Automated Clearing House (ACH) process. collection process is through the Automated Clearing House withholding method with fixed daily, weekly or monthly payments. This method allows the lender to withdraw a predetermined amount from your business bank account. Lastly, a lesser common method of collection is through a lockbox agreement. With this method, all of a business’s daily credit and debit sales are deposited into a lockbox account, in which the agreed upon repayment amount is removed by the lender.

Guest Blog presented by Kabbage: How Fintech Has Helped the Small Business Lending Industry Grow

by
How Fintech Has Helped the Small Business Lending Industry Grow | Excel Capital Management | Kabbage

It is amusing the way popular art often foreshadows or even predicts the future. Science fiction movies focused on space travel long before the first probes were sent to explore the galaxy, and self-driving automobiles were part of novels on the future long before they even became a possibility. Perhaps the best example of popular culture accurately predicting the future happened in 1984. The movie “Revenge of the Nerds” depicted a ragtag crew of science geeks getting revenge on the jocks and popular kids at their school. 

Today, as foreshadowed in the movie, nerds indeed have taken over the world. From one of the wealthiest men in the world, Bill Gates to the domination of the geek and nerd driven internet, the nerd now is in global positions of power. These same nerds, while long in the institutional financial space, have decided to shift their focus to the retail financial sector.

The Emergence of Fintech

Fintech has capitalized on the relationships that can be formed between finance and technology to drive innovation for everyone from businesses to everyday consumers. Whether it is having the capability to access a bank account on a tablet or paying for an in-store product with a mobile phone, these ties formed between finance and technology are the epitome of fintech.

The so-called fintech industry is targeting a treasure chest of over $4.7 trillion once dominated by old school players. Following in the footsteps of the other disruptive nerd driven technology, the fintech sector is on fire in regards to growth. The sector drew $12 billion investor dollars in 2014, an over 40% increase from the previous year.

Within the retail financial sector, small business lending, personal loans and loans for professionals have already been radically improved by the growth of fintech. This is not just speculation about the future – every day, small business owners are taking advantage of the new world of lending powered by the fintech revolution. 

Fintech vs. Traditional Lending

The fintech revolution has the traditional institutions very concerned. Jamie Dimon, JPMorgan Chase’s CEO, warned in his investor letter that “Silicon Valley is coming.” Jim Marous wrote in The Financial Brand, The impact of digital technology and the digital consumer is transforming the way consumers access financial products and services. Beyond simple transactions, such as checking balances, the intersection of finance and technology (fintech) is impacting virtually all categories of financial services at an increasing rate, reshaping the industry’s status quo.

Backing up his contention, Marous cited, Results from a PwC survey, ‘Blurred Lines: How FinTech is Shaping Financial Services’, found that the majority of survey participants see consumer banking and fund transfer and payments as the sectors most likely to be affected over the next five years. The report included responses from 544 CEOs, Heads of Innovation, CIOs and top management involved in digital and technological transformation across the financial services industry in 46 countries.

While these projections and warnings remains premature, it is a tell as to what the future holds for the overall financial sector from the fintech revolution. Truth be told, the fintech lending space remains a tiny part of the overall lending industry. One example of the size differential could be considered with $9 billion in loans funded by a fintech firm. While $9 billion is a tremendous amount of money, it is peanuts compared to the total loan volume. Even just compared to the $885 billion in total credit card debt outstanding in America, it is like a flea on an elephant’s back. 

An Analysis of the New Lending Industry

Traditional institutions stand to gain from the growth of fintech. Fintech has accelerated the growth of the small business lending sector in multiple ways. First, and perhaps most critically, fintech has lowered the cost of making loans for the lender. These savings can then be passed down to the borrower, creating a less-expensive product. Lending costs have been slashed by cutting out physical branches, legacy IT systems and burdensome regulations, allowing a more direct connection with the borrower.

Also, by moving the application process to the internet, additional costs can be cut from no more physical paper application processing. For example, the standard loan cost for a traditional lending institution is 5-7%.  Fintech lenders can cut this number down into the 2% zone. 

Next, fintech has opened up an entirely new clientele for business lenders.  Due to a lack of pertinent data and ways of processing it, traditional small business lenders are forced to rely on the old fashion ways of approving borrowers. The old style approval process takes into account credit score of the business and owner as well as the collateral to secure the loan.

The new fintech small business lending firms consider hundreds of data points, often in real time, to make credit decisions. This practical use of big data enables the new wave of fintech small business lenders to make loans that were previously impossible by traditional means. Credit-worthy customers may not have the collateral or perfect credit score to qualify at a bank for small business financing. However, the new wave of fintech small business lenders can be secure in making these once impossible loans.   

Finally, fintech is in the process of creating a more stable credit environment. The reason for this is the simple fact that banks rely on borrowed money to fund loans whereas fintech small business lenders use investor’s money directly to fund loans. This helps eliminate the inherent risks of borrowing to lend.

Wrapping things up, as you can see, fintech has revolutionized the financial industry and online business lending in particular. Although fintech remains a tiny part of the overall financial sector, it is rapidly growing. Using big data and high-speed processing computers, fintech firms can make loans that were once considered impossible by traditional lending institutions. In the process, fintech is super-charging the small business lending world with growth and new possibilities.

Kabbage is the industry leader in providing working capital online. Kabbage is dedicated to supporting the small business community and has funded more than $1.6 billion to help business grow.

Small business loans for non profit organizations

by
Alternative Funding Options for Nonprofit Organizations | Excel Capital Management

Unlike businesses that strive to make a profit for their owners, nonprofit organizations pride themselves in serving their respective communities and putting all money back into their cause. Although, the end goal may be a little different from regular businesses, nonprofit organizations still face the same financial issues. Like traditional businesses, nonprofit organizations must deal with tracking revenue, expenses, hiring and training personnel, equipment and supply purchases, and ultimately, need some working capital here and there.

While applying for a traditional bank loan may be the obvious solution, it may not be the most feasible one. Traditional bank loans require a hefty amount of paperwork, a tedious application process, and a lengthy wait period when it comes to receiving an approval or unfortunate decline. Alternative lenders offer a faster and easier solution. Typically, all that is needed to receive an offer in as little as three business days is a simple, one-page application, four months of recent business bank statements, and four months of recent credit card processing statements (if applicable). That’s it! Let’s take a look at a few alternative funding solutions for nonprofit organizations and how they can be used to grow and expand your organization.

The beautiful part about acquiring working capital as a source of funding for your nonprofit organization is that the money can virtually be used for anything – as long as it pertains to the business. Here are a few examples:

Hiring & Training Personnel:   As with any business, hiring and training the right personnel is essential to running a successful nonprofit organization. Maybe you need to hire a receptionist or accountant to help out with the books. Maybe you need to train existing personnel on new procedures.
Purchases & Expansion: Whether you need to purchase new inventory and supplies, repair equipment, open an additional office or location, or simply take care of a few bills and expenses, working capital acquired through one of the many alternative funding solutions available to nonprofit organizations can make all of these things happen easily.
Cash Flow Issues: Juggling bills, payroll, and unforeseen expenses for a nonprofit organization can cause some cash flow issues. Grants may flow in via uneven lump sums, contracts might not be renewed, and reimbursements for services rendered may take weeks to hit your nonprofit’s business bank account. Additional capital may be the solution needed to get everything back in sync.

Working Capital can cover the costs of all of the above and much more! For more information on funding options for your nonprofit organization, you can also call (877)880-8086 to speak directly to one of our funding specialists or APPLY NOW!

7 Money Saving Tips for Small Businesses

by
Money Saving Tips for Small Businesses | Excel Capital Management

Everyone loves saving money and small business owners are no different.  Although having a tight budget can make saving money tough, here are some money saving tips that can help your business budget.

7 Small changes that can help you save big in the long run.

1. Save Some Paper by Going Paperless

Reduce the amount your business uses paper and postage by working electronically. Going paperless is a great way to increase efficiency and reduce waste and clutter. These changes help lower costs while helping the environment.

2. Don’t Be Afraid to Shop

In addition to loyalty programs and selling in bulk, many retailers and vendors you work with may offer discounts for small businesses. Even if they don’t advertise it, take the initiative to ask. You’d be surprised how much money you save simply by inquiring.

Comparing vendor rates also ensures that you get the most for your dollar.

3. Create a Budget and Track of Expenses

Seemingly small charges add up quickly. Keeping track of your finances by creating a budget allows you to identify the best areas to allocate money. Another helpful tip is to create a log with all of your bills and due dates. Setting a “pay date” several days before the bill is due is an easy way to ensure your payment is received on time and avoid late fees.

4. Upgrade Your Tech

Nothing is worse than coming into work with the drive to get things done only to have your momentum halted because equipment doesn’t work. When troubleshooting becomes a large part of your day, it can severely cut into productivity and progress. Avoid this by replacing outdated or broken equipment.

5. Balance Transfer on a High-Interest Credit Card 

Many business owners have a business credit card that has a high APR attached to it. For some its comfortable to use the same card since its already opened and is linked to many recurring business expenses. However, there are many cards that offer a 0% interest introductory rate for up-to 18 months. CreditCards.com has put together a comprehensive guide with the best offers for balance transfers. To check it out you can view it here.

6. Adopt a Four-Day Work Week

It may seem counter-intuitive, but 4-day work week can help motivate employees to work with focus and more efficiently. Reducing the number of workdays forces you to cut back on time-wasting tasks. Instead of employees having to take days off for doctor’s appointments and other responsibilities,  a 4-day workweek provides the flexibility needed by everyone.

7. Allow Employees to Work from Home

If you aren’t fully convinced by the idea of a 4-day workweek, a good alternative is to let your employees work remotely. Today’s technology allows us to stay connected and work on-the-go. As long as your employees are motivated, engaged, and enjoying their job, they will want to do great work.”

If you find yourself in need of extra funds, Excel Capital Management can help fill in the gaps. Our consultants are available to guide you towards the best options for your business’ needs.

Working Capital Loans: Top Uses and How to Get One For Your Business

by
Top 5 Uses of Working Capital | Excel Capital Management

What are Working Capital Loans?

There’s nothing more stressful for a business owner than not having enough cash to cover working expenses or other operational costs. Working capital loans are the perfect solution to the slow rigorous bureaucracy we call banks.

Most business owners find themselves in need of extra cash at some point in the company’s lifetime. Slow sales, new competition, a seasonal business model, unforeseen circumstances and unexpected opportunities are all factors that can cause cash flow problems.

Worst of all, these kinds of issues usually crop up when we least expect them to.

Everything is smooth sailing until it isn’t, and when these financial crunches occur in most businesses there’s little opportunity to correct course fast enough to avoid some pretty sticky financial situations.

Fortunately, there are working capital loans – just the thing your business needs when you’re in need of an immediate injection of capital. Financial packages like these can get you out of those sticky situations and actually position you for success at the same time.

Do I need working Capital Funding?

Whether you are having trouble paying your operating expenses, have an equipment breakdown or just a slow month, working capital loans are at your disposal (usually with just a click of a few buttons). These are the kinds of loans that can save your bacon before it hits the frying pan.

Working capital loans give you the ability to pay those working expenses and continue daily operations while generating the revenue necessary to run your business smoothly without sweating a temporary crunch. You’ll be able to keep rocking and rolling, striving for that positive cash flow you need as a business, without having to wonder where the next big financial crunch in your operation is going to come from with the help of working capital loans.

With the evolution of Fin-Tech, you’re not limited to a single type of business loan product. Excel now offers a variety of Working capital loan options all catered to your specific business needs.

 

Complete our online application and discover how much you can be approved for: Apply Now

 

In short working capital loans is any cash or credit usually delivered via a business line of credit or an unsecured business loan or any other type of financing which offers a solution to a business’ day-to-day operations and financial needs. The beautiful thing about acquiring working capital for your business is the fact that it can be used for virtually anything (as long as it pertains to the business itself). Here are the top five ways in which many business owners choose to use their working capital.

What is Working Capital

Working capital is any form of cash or funding that is used to operate a business. Most business owners look at working capital as the lifeblood of operations. It helps keep things running smoothly and efficiently. Without working capital, expenses can’t get paid and can be harmful to your business existence.  Working capital can be acquired or saved but it is the cash available to use on a day to day business to operate a business.

What Are the top 5 Uses of Working Capital?

We have helped deliver capital to thousands of business owners nationwide and have seen it all. We have put together what we see the most often.

Inventory and Equipment Purchases

Many business owners choose to use working capital to take advantage of bulk pricing on inventory and equipment. Similarly, equipment such as machines, computers, vehicles, and more can reach well into the thousands of dollars. Because many vendors require a large upfront payment for this type of pricing on inventory and equipment, working capital gives business owners the funds they need to purchase the items they need before it’s too late.

Expansion

Once your business gets through the startup stage and figures out a regular routine, the best time is when there is just too much business to keep up with!

Many business owners find themselves needing to expand and grow to keep up with the demand. Working capital can be put to use to open a new location, build onto an existing location, add on additional parking, and much more!

The Net Working Capital Formula can also provide you with a chance to take advantage of hot opportunities that may not present themselves ever again, even if your cash and capital reserves on hand right now aren’t quite as viable as have like them to be.

These are the kinds of opportunities that can explode your business capacity, take you to the next level professionally, and open up a world of financial opportunity that simply wouldn’t have existed otherwise.

Unfortunately, no one really knows when these financial opportunities are going to start knocking at your door – but luckily, with the help of working capital loan packages and the Net Working Capita Formula you will be able to jump on board the chances for growth whenever and however they present themselves.

New Hires and Employee Training

Another form of expansion can be hiring new employees. Once your business starts to boom, you may need some extra help. Maybe you want to hire additional cashiers for your store. Maybe your restaurant needs additional wait staff. Maybe your doctor’s office needs another receptionist. Maybe you even need to hire a few accountants to help take care of your finances. Additionally, many of these employees will need adequate training. Working capital can be used for all of these things!

Unforeseen Problems

Unfortunately, with every business, problems do arise. Equipment fails, vehicles breakdown, natural disasters occur, employees, leave. The headaches are unforeseeable and can be expensive, but working capital can help to cover the costs in a matter of a few days.

Business Expenses

By acquiring working capital loans for your business, you will be able to pay for things that may have been unaffordable in the past. You may need office supplies, new computer software, or you may have a few bills to pay. These payments can all be made possible with working capital.

At the end of the day, the right working capital loans have the potential to help you build and grow the kind of business you’ve always dreamed of owning and running.

Before acquiring a working capital loan it is very important to understand the cash flow of your business and how a business capital loan can affect the bottom line. 

The working capital formula is crucial in understanding this.

 

What is the Net Working Capital Formula?

Before you jump into the Net Working Capital Formula you have to understand what is net working capital. Net working  capital is used to calculate the liquidity of a company by calculating its current assets that can be used to pay off its current liabilities. This calculation is very important as it’s used by company executives, vendors and other creditors to see how efficiently the company case use its assets and get a general idea of the company’s short-term liquidity.

The amount of current liabilities a company has in the current year is the primary focus of the Net Working Capital Formula which focuses account payable, any sort of debt from trades and also notes from other vendors.

On top of that, you’re also going to have to fundamentally understand the Four C’S Of Credit and how they are going to impact your ability to take full advantage of net working capital loans(as well as how they are going to impact your viability as an entrepreneur and business owner in general.

A lot of business owners and operators are under the impression that they’ll be able to utilize nothing more than their sales, revenue, and other business assets to take full advantage of financing packages from operations like net working capital.

And while that may be true to a point, at the end of the day the Four C’S Of Credit are always going to have an impact on your finances – and you have to be sure that you are doing everything you can to maximize those key criteria to leverage financing as often as possible to grow your business and accomplish the kind of financial future you’ve always dreamed of.

We’ll dig a little bit deeper into the working capital formula, the 4 C’S Of Credit, and how they all come together in the Net Working Capital Formula in just a moment.

To calculate the Net Working Capital Formula you have to all the current liabilities your company has from all the current assets of your company.

The assets that are put into consideration when calculating the Net Working Capital Formula are current cash, account receivable, all investments (short-term) and the current inventory the company has. These are the assets that have the most viability to financiers like net working capital, and they are the assets that are going to shine the brightest light on the financial health and wellness of your company on a regular basis.

It’s critical that you are able to produce information pertaining to these core assets before you get started looking to leverage the working capital formula. You’ll need to know exactly where you stand as a business financially before you start to dive deep into these opportunities, and only your own accounting will be able to provide you with those kinds of answers.

The current liabilities include account payable, taxes, all sorts of stacked investments, debt from trade and deposits from various customers. Liabilities should be kept to as much of a minimum as possible for smart and savvy business purposes, and companies that have a negative cash flow – as well as anything but solid 4 C’S Of Credit – are going to have a really tough time taking advantage of any financing packages.

At the same time, The Net working Capital Formula is always trying to help entrepreneurs and business owners across all industries and with a multitude of different financial outlooks. It’s still a good idea to reach out to our operations to see if you can take advantage of the working capital formula, even if your liabilities are a little bit higher than you expected or anticipated upon closer look.

A Better Understanding of the Four C’S Of Credit

Every financial lender out there is going to take four key criteria into account when they are trying to decide whether or not you qualify for working capital loans or financial packages, and those four key criteria make up the “4 C’s of Credit” that we’ve been talking about.

These criteria include:

  • Your character
  • Your collateral
  • Your credit score/credit history and
  • Your capacity to repay loans moving forward

Each of these four key criteria are big pieces of the credit puzzle, and it’s important that you do absolutely everything you can as an entrepreneur to maintain good character, to have collateral available to put up to secure the kinds of financing you need, to improve your credit score and bolster your credit history, and to prove your capacity to repay loans and financial packages with a positive cash flow.

As a nontraditional lender, net working capital has its own proprietary working capital formula to work off of when determining the worthiness of the applicants. But we can tell you that the Four C’S Of Credit are always going to play a role in this determination. It’s important that you do everything you can to improve those criteria, patch of any holes, and recover from any dings or dents that may have hit your credit in the past.

The Net Working Capital Formula has been designed to make it as easy as possible for qualified entrepreneurs to leverage cash and capital when they need it most, and while it relies on the Four C’S Of Credit for sure to boost and build your business there’s a lot more that goes into this formula man is immediately apparent on the surface.

To learn a little bit more about the working capital opportunities available, or to see if you qualify for these kinds of financial packages now, reach out at your earliest opportunity. We would be happy to talk a little more about how we might be able to build and grow your operation by working together!

Complete our online application and discover how much you can be approved for: Apply Now

4 Helpful Tips To Increase Employee Productivity

by
4 Helpful Tips To Increase Employee Productivity

Every successful business owner understands that their company is only as strong as it’s weakest link. Improving and sustaining employee productivity is a must when it comes to running a successful operation. Here are a few helpful tips for increasing employee productivity and establishing healthy, working relationships with them.

Communicate, Communicate, Communicate.

Communication, as you know, is probably the most important aspect of being a boss and operating a business. Without proper communication skills, you and your employees will have a difficult time delegating tasks, performing day-to-day tasks, and ultimately, achieving business goals. As the leader, it is your job to find a clear and effective means of communication between you and your employees. Not only should you make sure employees understand what you ask of them whether through email, conference calls, or in-person meetings, they should also feel comfortable and safe communicating with you and others within the company about tasks, goals, ideas, questions, and concerns. Lack of communication leaves many people lost and confused. There is no room for that in a successful business.

Ensure Employees Understand Your Expectations

All businesses should have clear goals and expectations in mind. Your employees are there as assets to your company, therefore, everyone should understand what they are responsible for and what is expected of them on a day-to-day basis, and overall during their time at your company. A confused mind will do nothing, meaning it is your job to present a clear plan and opportunities for all employees to learn and grow. Everyone should know what they need to do at all times while striving to progress and do their job more efficiently, as well as learn additional skills to move on to higher positions.

Eliminate Negativity

You know what they say – misery loves company. The working atmosphere at your business is a very influential factor when it comes to employees and their performance. As a business owner, it is your job to ensure all employees feel comfortable and confident at work. Eliminate all negativity from both your side and your employees’. Observe the work environment and develop a way to remove or improve negativity. Lack of communication, lack of organization, lack of motivation, and pessimistic personalities are all negative traits that should be addressed and dealt with accordingly. Not everyday will be full of sunshine and happiness, however, this should not slow down productivity and drive.

Provide Constructive Criticism and Feedback

The number one thing that most employees appreciate in an employer is constructive criticism and feedback. Most people tend to work better when they understand what is expected of them, what they’re doing well, and what they could be doing better. Instead of simply reprimanding an employee for a mistake or incomplete task, meet with them to address what you expect to be done differently next time, what you feel was done well, and what you appreciated. Similarly, with a job well done, praise and rewards are a big productivity enhancer. Everyone loves to be rewarded for a job well done, and this doesn’t always have to go as far as a raise – a simple “good job” could brighten anyone’s day. Providing appropriate incentives and honest feedback is crucial when it comes to being a successful business owner and employer.

Summertime Sadness: How to Curb Slow Summer Business

by
Summertime Sadness: How to Curb Slow Summer Business

So you’ve gotten through the holiday rush and spring sale seasons only to have business come to a slow creep. Don’t panic; you’re not alone. Unless you run an ice cream shop or sell beach gear, your business is bound to experience slow sales during the summer months. The following are 3 tips on how to help build your business by utilizing this time the best way possible.

Social Media Revamp

The summer months are the perfect time to focus on your social media presence. Many make the mistake of thinking that posting regularly is the same as successfully socializing with their followers, however, having a lot of content doesn’t help unless it is of quality and you engage your followers. Run summer themed contests, share photos of your staff enjoying the nice weather, post vacation pics or plans. Have fun and be creative! 

Tax Prep

Despite it occurring the same time every year, tax season always seems to take people by surprise. You promise yourself that you will never wait until the last minute again only to fall into the same trap. Prepare for the inevitable by gathering your receipts and organizing your finances. *Attention restaurant owners, we wrote a helpful a few months back titled: Tax Filing Tips for Restaurant Owners. Check it out!

Reevaluate and Reflect

Now that you’ve reached the midway point reevaluate your business’ goals for the year. Celebrate the goals you’ve successfully implemented and take steps to improve on the rest. Make sure that your daily actions reflect the goals you’ve set.

Reach Out for Working Capital


Just because business is a little slow, doesn’t mean you have to stop growing. Now may be the perfect time to reach out for working capital from an alternative lender. Alternative financing products such as the popular Merchant Cash Advance is a great solution for your business to purchase necessary inventory, hire new employees, train existing employees on new systems and business techniques, implement marketing campaigns, and much more!

At Excel Capital Management we know what you need to for your business to grow. Grant Cardone also wrote a great piece for Entrepreneur titled, “5 Sales Tips to Recharge During the Lazy Days of Summer.” Check it out! 

Ready to Fund Your Business?

Explore small business loan options, including business lines of credit and term loans. Complete a simple application to see which funding options may fit your business.

Check Your Funding Options