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How to Get a Home Based Business Loan: 5 Options

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Home based business loans guide with a laptop, construction plans and hard hat in a home office.

Funding for a Home-Based Business

Getting the funding you need for a home-based business can be challenging. Home based business loans can help eligible businesses cover equipment, inventory, payroll and other operating costs without a separate commercial office. Approval depends on the business, the financing product and the provider’s requirements.

Starting a home-based business means sorting out licenses, taxes and day-to-day operations. Finding business capital to start, grow or expand is another step. If you are wondering how to get a loan for a home-based business, understanding what funders look for is a useful place to start.

Many small companies start at home. It is where owners build their customer base and lay the foundation for the business. Money can be tight during those early years.

Aside from getting clients, one of the biggest challenges for business owners is finding financing. Some funders apply stricter requirements to home-based businesses, especially when operating history or collateral is limited. There are still several financing options to consider.

Home-based business funding can take several forms, from equipment financing to a revolving line of credit.

This guide covers five funding options, why approval can be harder and what to prepare before you apply.

Explore funding for your home-based business with Excel Capital: Apply Now

Home-Based Businesses After COVID: A More Common Way to Work

Home-based businesses were common long before the pandemic. The SBA Office of Advocacy’s 2020 Small Business FAQ reports that about 50% of all U.S. businesses were home-based including businesses without employees. That figure comes from older survey data, so it describes the pre-pandemic picture.

Since COVID-19, working from home has become a regular part of business life. Consultants, online sellers and service businesses can manage clients, payments and teams from a home office. For many owners, there is little reason to take on a separate office lease.

U.S. Census Bureau data on working from home illustrate the broader change: 13.8% of U.S. workers usually worked from home in 2023, compared with 5.7% in 2019. These are workforce figures, rather than a count of businesses or loans, but they help explain why working from home feels much more familiar today.

Working from home can cut rent, commuting and office costs, leaving more money for equipment, marketing and staff. Even with lower overhead, you may still need working capital when bills come due before customers pay.

Why Many Businesses Operate From Home, Especially Contractors

Construction is a good example. A general contractor, roofer, electrician or remodeler may handle estimates, scheduling and bookkeeping from a home office while crews work at customer job sites. Paying for a separate office may add little value when customers rarely visit it.

A contractor can run the office from home while owning tools and equipment, using a storage yard, employing a crew and working on signed projects. The address alone tells a funder very little about the size or stability of that business. Our guide to construction business loans explains financing needs such as materials, payroll and equipment while waiting for project payments.

The same logic applies to mobile service providers, online retailers, bookkeepers and creative agencies: the work may take place at clients’ properties, online or across a remote team. A funder needs to understand how that business operates and earns revenue.

Still deciding what to launch? Explore our home-based business ideas for options that fit your skills and experience.

Why Can It Be Harder for a Home-Based Business to Get Funding?

Perceived flight risk and business continuity

A funder wants to know that your business will still be operating when payments come due. Without a commercial lease, storefront or fixed business location, some funders may worry that it would be easier to shut down, move or become difficult to contact. This perceived “flight risk” can make them more cautious about an application.

A commercial lease is only one sign of commitment. Years in business, repeat customers, signed contracts, consistent deposits and an address the funder can verify can also show that you have an established business. Closing or moving a business does not, by itself, cancel its debts, contracts or applicable personal guarantees.

Fewer fixtures and other assets available as collateral

Some home-based businesses have few or no business-owned fixtures compared with a shop, restaurant or commercial workshop. Fixtures are goods that attach to real property so closely that applicable law treats them as part of that property. A laptop, portable tool or movable desk is generally equipment or furniture, rather than a fixture.

Fixtures can be part of the collateral securing business financing. Depending on the security agreement and applicable law, other collateral may include equipment, inventory and accounts receivable. A UCC filing gives public notice of a claimed security interest; filing alone does not create collateral or make low-value assets more valuable. If there are few assets a funder could recover after a default, qualifying for financing that relies on collateral may be harder.

The UCC’s rules for security interests in fixtures include special priority rules, and a creditor may need a fixture filing. The actual collateral depends on the agreement, the borrower’s rights in the assets and state law. A business address at home does not automatically put the house or the owner’s household fixtures under a business UCC lien.

Harder-to-verify revenue and repayment capacity

If personal and business transactions run through the same account, it can be hard to tell how much the business earns. Incomplete records or dependence on one customer can raise more questions. Clear bank statements, current financial reports and a practical repayment plan help the funder understand what is happening in your business.

What helps: Explain why working from home fits your industry, where the work actually happens, and how the business earns steady revenue. Support that explanation with licenses, insurance, customer contracts, invoices, bank statements and an accurate list of business assets and existing liens.

How to Fund a Home-Based Business: 5 Financing Options

When comparing home based business loans, start with what you need to finance. Equipment purchases, day-to-day expenses and gaps between customer payments may call for different products.

Five home-based business funding options: equipment financing, merchant cash advance, short-term loan, unsecured business loans and business line of credit.

1. Equipment Financing

Equipment financing helps business owners purchase eligible equipment needed to run the business.

The loan amount is dependent upon the type and cost of equipment needed. Repayment terms depend on the provider, the equipment’s expected useful life and whether it is used or new. The equipment itself commonly serves as collateral.

2. Split Funding / Merchant Cash Advance

Split funding is a form of merchant cash advance that works on a “pay as you earn” model.

Providers generally structure a merchant cash advance as a purchase of future receivables rather than a loan. In a card-split arrangement, an agreed percentage of your business’ credit and debit card sales goes toward the purchased amount.

On days with higher card sales, the provider collects a larger remittance. When card sales drop, you remit less. Other revenue-based advances collect through ACH debits and may include reconciliation provisions. Review the total cost, collection method, adjustment rights and any guarantees in the agreement.

3. Short-term Loan

Short-term business loans help owners cover immediate expenses and manage cash flow gaps.

Some providers require less paperwork than a traditional bank loan, and you can use the funds for a range of business purposes. Permitted uses depend on the agreement.

Common uses of short-term business loans are inventory purchases, new hires and employee training, equipment repairs, and filling gaps between accounts payable and receivable. A shorter repayment schedule can mean larger payments and higher costs. Repayment may be daily, weekly or monthly, depending on the lender and agreement.

Traditional term loans also have a fixed repayment term, but the interest rate may be fixed or variable. Payments are often monthly. Whether payments build business credit depends on the lender’s reporting, and any prepayment penalty depends on the agreement.

4. Unsecured Business Loans

Unsecured business loans can help home-based owners who do not have specific assets to pledge as collateral. Lenders review factors such as revenue, cash flow, credit and operating history. Product terms vary, and some providers may still require a personal guarantee or blanket lien on business assets.

Depending on the agreement, you can use the funds for inventory, payroll, marketing, equipment or other business expenses. Compare the total cost and payment schedule with the cash your business expects to collect.

Some lenders collect repayments through ACH, which means automatic debits from your business bank account. ACH describes the payment method. Your agreement determines whether payments fall daily, weekly or monthly.

Credit score, revenue, time in business and collateral requirements vary by provider. Some products accept borrowers with challenged credit or do not require a specific asset pledge, but a personal guarantee or a lien on business assets may still apply. Review the agreement before accepting an offer.

5. Business Line of Credit

A business line of credit, also known as a “LOC,” gives business owners access to a credit limit they can draw on as needed. On a revolving line, repaid principal generally becomes available again, subject to the agreement. Lenders generally charge interest on the amount you draw and may also charge fees.

There are two types of Business Lines of Credit:

1. Unsecured Business Line of Credit

Unsecured business lines of credit do not require you to pledge specific assets as collateral, though product descriptions vary. Check whether the lender requires a blanket business lien or personal guarantee.

This can be appealing to home-based business owners with limited fixed assets. Credit requirements vary, and lenders may also review revenue, cash flow and time in business.

In addition, they tend to be smaller with higher interest rates.

2. Secured Business Line of Credit

A secured business line of credit requires business owners to put up assets as collateral in order to obtain the loan.

Depending on the lender, collateral may include inventory, accounts receivable, equipment or other assets. If you default, the lender may enforce its rights against the pledged collateral under the agreement and applicable law.

Both secured and unsecured business lines of credit will require your business to be in good standing.

Lenders typically prefer to work with businesses that are well-established and in good financial standing, thus demonstrating the ability to pay back the loan. Your lender may request financial documents to assess your ability to repay.

Explore a business line of credit for your home-based business with Excel Capital: Apply Now

Can a Home-Based Business Get an SBA Loan or Microloan?

A home-based business may be eligible for SBA-backed financing if it meets the program’s and lender’s requirements. The SBA’s 7(a) eligibility guidance emphasizes an eligible operating business, creditworthiness and reasonable assurance of repayment. A home address alone does not establish eligibility. See our SBA loan guide for an overview.

For smaller needs, including some startups, the SBA Microloan program provides loans of up to $50,000 through approved nonprofit intermediaries. Each intermediary makes its own credit decisions and sets terms. This can be worth exploring if your home-based business does not yet have the operating history needed for other financing.

How to Apply for Home Based Business Loans

One of the benefits that come with alternative lending is a fast application and approval process.

Applications for home based business loans vary by provider. Some alternative lenders offer streamlined applications, but funding speed and paperwork depend on the product and completeness of your application.

Your lender reviews the initial paperwork and may ask for additional documents before making a funding decision.

Prepare these common business documents before you apply:

  • One-page application
  • Voided check (for your business account)
  • Copies of identification for all owners
  • Proof of ownership: Most recently filed tax return, corporate bylaws or LLC articles of organization
  • Proof of EIN, such as an IRS EIN confirmation letter; see our Form SS-4 and EIN documentation guide
  • Recent business bank statements (the number of months varies by provider)
  • Aging AR report if you invoice customers on net-30 to net-90 terms

Your lender may not need every document on this list. Having current records ready can help you answer questions quickly and avoid delays.

Help the funder verify your home-based business

Also be ready to explain where you perform your work and provide current licenses, insurance, proof of your operating address and customer contracts or invoices. Contractors can include a project backlog and payment schedule. Keep personal and business finances separate, disclose existing financing and liens, and prepare a current profit and loss statement. If customers pay after you complete a job, an accounts receivable aging report can help explain the gap between billed revenue and collected cash.

Home-Based Business Funding with Excel Capital

When comparing funding for a home-based business, look at the total cost, payment schedule and any collateral or personal guarantee requirements.

At Excel Capital, we help business owners explore financing options based on their revenue, operating history and funding needs.

The application process is quick. If approved, some products may fund in as little as 24 to 48 hours after required documentation and verification are complete; timing and availability vary.

Click below to start your application:

Start your application for home-based business funding: Get Started

Construction Business Loans: Get the Funding Your Business Needs Today

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CONSTRUCTION BUSINESS LOANS FEATURED IMAGE

Construction Business Loans: Everything You Need to Know

As a  general contractor, you know that obtaining construction business loans is important to running a construction business and operating in a fluid fashion.

Full payment for a project does not typically come until at least 90 days after the project start date, but construction costs don’t wait around,  which makes construction loans a necessity to function.

When a new job is taken on you receive a small down payment upfront as well as progress payments or tiered payments as the job hits certain milestones. This delayed payment structure makes obtaining construction business loans crucial to maintain positive cash flow. 

Because of this structure, contractors need to come out of pocket for many expenses such as: 

  • Payroll
  • Material Costs
  • Insurance
  • Equipment 

Contractors know that obtaining funding is the solution. But what do you do when you can’t be approved– or can’t wait– for a traditional bank loan? 

Why Take Out a Small Business Loan Instead of Going to Your Local Bank or Traditional Lender?

 

construction business loan quote

 

It’s all about timing.

Most banks and traditional lenders (such as SBA loans) take way too long on loan approvals. And even if you try to avoid the timing issue by planning when you need it, many contractors that apply for construction financing with their local bank find that they can’t be approved without collateral.

Banks use traditional underwriting practices, which places the commercial construction industry in a high-risk bracket. That means you’ll need to have something to put down to secure the loan otherwise you’re not likely to be approved.

However, this needlessly puts you at additional risk on each and every job. Not to mention, puts you under extra stress that you don’t need. 

Alternative lending offers a way around these strict requirements and gives business owners a path forward.

At excel we’ve worked with hundreds of construction business owners to offer unsecured loan options that give you the funding you need while affording the flexibility to get approved without having to put down hefty collateral.

Short application, get approved in as little as 24-48 hours: Apply Now

Types of Construction Loans: Alternative Loan Options

So, what are your options for construction loans?

Well, you’ve got a lot. And it all comes down to what you need the funds for and what type of loan fits your business and the types of construction projects you take on.

As mentioned above, no matter what you need funding for, there are several working capital loan options available. However, some construction loan options are designed for specific needs while others are more general.

Let’s break each down individually to give you a better idea of which might be a good fit for you:

 

 

1. Equipment Financing

Equipment financing is used to help you purchase whatever equipment your business needs to run smoothly.

The loan amount is dependent upon the type of equipment the borrower needs, as the repayment term is usually as long as the expected life of the piece of equipment.

2. Invoice Factoring

Invoice factoring is used for short-term cash flow issues, especially when your business doesn’t qualify for a traditional bank loan or any other alternative solution. That’s because it depends less on your credit score and more on other business factors such as your accounts receivable.

The lender will factor your business’ customer’s invoices to match your working capital needs.

This type of program is rarely used for contractors since progress payments cannot be factored. Factoring companies only use invoices for work complete. In the construction business, it typically happens this way.

3. Unsecured Business Loans

Unsecured business loans were designed for business owners to enjoy the benefits of a merchant cash advance who do not accept credit cards at there business. Most contractors do not receive credit card payments – and even if they do its typically a very small percentage of the annual gross sales.

This works as a purchase of future sale at a discount that is converted into a set payment. This payment is remitted via ACH usually daily, weekly or monthly. 

This allows you as the borrower to get construction loans without any collateral, just your sales. It also requires a lower credit score compared to traditional lending for the same reason.

4. Merchant Cash Advance

For those of you who accept credit cards at your business, split funding, or a merchant cash advance, is a construction business loan based on a purchase of your future credit card sales at a discount.

Payments are collected at a set percentage of your credit card sales, which is nice because that means when business is down– so are your payments. And when there is no business– no percentage.

For that reason, this method really helps during a particularly volatile market or rough patch in your construction business.

It also doesn’t have a stringent a credit score requirement due to factoring in your credit card sales more than anything else. 

5. Term Loans

Our fourth construction business loan option, term loans have a set repayment schedule and interest rate and mature between 1 to 10 years depending on the term of the loan. Most commonly being short-term loans which offer a quick lump sum of cash with a short repayment date. 

However, keep in mind that a short-term loan, or any other term loan, requires financial statements as well as 2 years of business history and one filed tax return.

6. Business Lines of Credit

A business line of credit is a rotating line of credit which you can dip into whenever the business needs it most.

Similar to a credit card, so long as you pay off your balance you can continue to use that line of credit continuously. Interest is then only paid off the amount that is used.

7. Asset-based Lending

Lastly, with asset-based lending, the assets of a business, such as inventory, accounts receivable, and other balance-sheet assets are used as collateral.

Plus, because this financing type is secured with collateral, interest rates tend to be low and credit score requirements are lower as well. Having applicable collateral also makes an asset-based loan easier to obtain.

Complete our short application and get approved fast:Apply Now

How to Get a Construction Loan: How Do Construction Loans Work?

 

how to get a construction business loan

 

Ultimately, it’s up to you to do your research and find out what your best small business loan options are.

It’s your business and no one is going to look out for it like you will, so take the necessary steps to educate yourself and then take action to obtain the funding your business needs, whether that’s to keep things afloat or to take things to a whole new level.

Whatever the case, don’t let a lack of funding hold your business back from realizing it’s potential.

To apply for a construction business loan with Excel Capital, only four things are required:

  1. Four months of recent business bank statements
  2. Four months of business credit card processing statements
  3. A one-page application
  4. And just a few minutes to get started

We’ve made the process of getting a small business loan simple and straightforward so you can get back to what is most important– running your business.

Once everything is received, you can be presented with an approval, your loan terms, and funded in as little as one business day– that’s right, just 24 hours.

Get the funding your contracting business needs by completing our short, 2-minute application.

Excel Capital Helps Contractor Marty Secure a Loan: A Case Study

While the construction business is one of the oldest, most flourishing, and most competitive industries around, there comes a time when many of its business owners need access to working capital.

The cost of equipment, materials, payroll, and slow turn-around rates trump the cash flow coming in, and many construction company owners find themselves weighed down by bills and overhead costs.

Since the great recession of 2008, a traditional bank loan is no longer the go-to solution when it comes to acquiring capital.

That old-school way of doing things sometimes ends in heartbreak due to waiting weeks just to receive an answer. That’s where the alternative financing industry comes into play.

With financing solutions such as the ever-popular merchant cash advance, ACH loan, asset based loans, equipment financing, and more, access to working capital is easier than ever.

Funding Needed Fast

Recently, Marty, a construction company owner from Georgia reached out to the Excel Capital team.

Marty was in a crunch. He needed funds– and he needed them fast.

With a handful of projects on his plate, along with receivables due on a large ongoing project not being paid on schedule, Marty asked us for working capital to be used towards the purchase of materials, equipment, licensing, and payroll.  

Marty’s workers and office employees needed to be paid and materials needed to be purchased. So, waiting for payouts was not an option.

In order to get things back on track, as well as to generate new growth, Marty asked our sales rep, Jordan for help in securing an ACH loan. A short term funding product, an ACH loan is paid on a daily or weekly basis by direct ACH debits.

Marty had close to $200,000 tied up in projects which wouldn’t come in for at least thirty days, plus roughly $150,000 in retainage for completed contracts. However, that was going to be payed out over six months.

He also had both a $2 million and a $1.5 million contract on the table respectively (both carrying a 20% gross profit), but those were not set in stone.

Marty’s company had no time to wait with other projects lined up and needing to be completed soon. However, they couldn’t be completed unless he had the means to hire more workers and purchase new machines to keep up with the timelines in place.

Marty Joins Forces with Excel Capital

To the Average Joe, these type of accounts receivable amounts seem amazing, but in the construction business, we know this revenue doesn’t always reflect the tangible finances.

Most, if not all, of the money is put back into the company to complete ongoing projects.

Whether Marty could wait until his own payday or not– he needed working capital now.

After supplying us with bank statements, a business lease, his driver’s license, and a few other minimal stipulations, we were able to get Marty $80,000 in working capital in a matter of only two days!

The daily repayment amount was only $400, an ACH automatically debited (so Marty wouldn’t have to worry about making any large monthly payments, he could focus on his projects at hand) which would happen over the course of 12 months.

It was as simple as that! No hassles or phone calls from banks, just fast funding, easy communication, and transparent terms. And, most importantly, peace of mind.

Get a General or Commercial Construction Loan with Excel Capital

At Excel Capital, we know that getting the funding you need is critical to completing bigger and bigger jobs and keeping your business going.

Reach out to the Excel team to find out if you qualify for a construction loan as well as to discover your options.

Apply for a construction business loan from Excel Capital: Get Started

Motel loans: What funding options are best for Hotels, Motels and Bed and Breakfasts.

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Motel Financing: How to Obtain the Working Capital You Need | Excel Capital Management

Owning and operating a motel business is no easy task whether you have one location or are in charge of a franchise. Keeping up with trends and the constant competition among other motel and hotel chains can be quite difficult at times, and some additional working capital may be needed to keep up. When it comes to applying for financing help, many motel owners have a tough time going the traditional route. Traditional banks and lenders tend to list motels as high risk for various reasons such as seasonality, low numbers of  guest bookings, negative reviews, lack of collateral to pledge when obtaining financing, and more. These concerns are all justified, but it’s not the end of the road. There are many alternative funding options available to motel business owner. Let’s take a look!

Motel Financing Options

Split Funding aka Merchant Cash Advance: Short-term financing transactions that are collected through a set percentage of your Visa and MasterCard sales that are accepted at your place of business. Probably the most common term used in the industry. These do not have a set repayment schedule and are based on the volume of your businesses credit card processing sales. These are usually only guaranteed by the future sales of your business.

Split Funding aka Merchant Cash Advance: Short-term financing transactions that are collected through a set percentage of your Visa and MasterCard sales that are accepted at your place of business. Probably the most common term used in the industry. These do not have a set repayment schedule and are based on the volume of your businesses credit card processing sales. These are usually only guaranteed by the future sales of your business.

Equipment Financing: Equipment Financing is a loan product used to help business owners purchase any type of equipment needed to run the business. The loan amount is dependent upon the type of equipment needed, as the repayment term is usually as long as the expected life of the piece of equipment and if it is used or new.

Term Loans: A loan that is backed by a bank for an exact amount that has a specified repayment timetable and interest rate that are adjusted accordingly. Terms mature between 1 and 10 years.

ACH Loan: These loans may need personal guarantees, and have a fixed repayment schedule that is paid either daily, weekly or monthly. These products are catered to industries that do not accept credit cards and need a fixed payment.

Business Lines of Credit: A rotating loan that gives business owners access to a fixed amount of money, which they can use day-to-day according to their need for cash. Interest is only paid on the amount of the advance actually used.

What Can Working Capital Acquired via Motel Financing Be Used For?

wealth | excel capital managementWhat’s great about all of the aforementioned motel financing options is that the working capital acquired through any of them can be used for virtually anything as long as it pertains to the business. Whether your motel has hit a rough patch and you need the capital to fix cash flow issues, or business is booming any you want to grow bigger and better, you can use it! Here are just a few popular working capital uses among motel owners:

– Business Expenses and Tax Payments

– Payroll and New Hires

– New and Additional Locations

– Equipment and Supplies

Three Crucial Steps to Take Before Applying for Motel Financing

motel | excel capital management

As you would assume, there are many, many alternative lenders out there who can promise you the world when it comes to your motel financing needs. While most lenders and brokers out there are good guys, it is in your best interest to be cautious and to ask questions. Before you sign anything, make sure you fully understand the business funding solution you are applying for, how it works, and what the overall cost will be – literally and figuratively. Here are three crucial steps to take before you apply:

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 advisers, 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. Speak with your chosen lender to go over all of your options and get a better understanding of each financing option and 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.

The Application, Approval, and Funding Process

The great thing about motel financing is that the application, approval, and funding process is quick and simple. Generally, lenders that provide these financing options only require a simple, one-page application, four months of recent business bank statements, and four months of business credit card processing statements to get started. Once these pieces of documentation (and maybe a few others) are received, you can be presented with an approval and funded in as little at three business days!

For more information on motel financing options, contact one of our funding specialists today at 877-880-1106 or APPLY NOW! 

Hard Money Business Loans and How One Can Benefit Your Business

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Hard Money Business Loans and How They Can Benefit Your Business | Excel Capital Management

If you’re a small business owner, you most certainly are aware of the many reasons why you, or any other entrepreneur for that matter, might need a small business loan. The reasons could range from office renovation, purchasing new inventory, up-dating computers or other equipment, or paying unforeseen taxes and other obligations. Or, maybe business has been so good for you that you found yourself shorthanded and need to hire more people, but don’t have the cash on hand to cover the cost of adding personnel.

For small businesses, just as in any other business, cash is king. Having sufficient operating capital can mean the difference between growing your business and simply standing still. In some cases, it could even be the difference between great success and utter failure. Many small business owners, in the early stages of operation, may not have thought that they could get a loan to keep them going until they prospered. Seasoned business owners could have mistakenly assumed that the only place they could go for a business loan was the banks, and they wouldn’t be successful. Even thriving businesses are recognizing that they could benefit from an influx of cash, and these types of loans could be the answer to their problems. Not to worry! There are options. Consider a Hard Money Business Loan.

What is A Hard Money Business Loan?

document | excel capital management

 

Hard Money Business Loans are a viable alternative to bank loans for providing necessary capital to companies that may be under-capitalized, growing rapidly, in the middle of a turnaround, or highly leveraged. In many cases, a small business might just require a cash infusion for preventing their growth from coming to a standstill or for getting over a financial hurdle. Using your business’ assets could be the key to obtaining the working capital needed for inventory, equipment repairs and purchases, or anything else your business may need. In short, you would be borrowing against your future business income, therefore, gaining access to that revenue sooner rather than later.

 

 

 

 

 

 

What Can a Hard Money Business Loan Be Used For?

The beautiful thing about a Hard Money Business Loan is that the working capital acquired through it can be used for literally anything as long as it pertains to your business. Many small business owners opt to use their loans for:

  • Business Expenses and Bills
  • Cover The Costs Customers Who Fail to Pay On Time
  • Seasonal Slow-Downs
  • To Fix Cash Flow Problems
  • New Hires and Employee Training
  • Inventory and Equipment Purchases
  • Marketing and Advertising
  • Product Manufacturing
  • Office Space
  • Research and Development
  • Unforeseen Circumstances (ie: natural disasters, employee resignations, equipment failure)

 

What Types of Assets Can Be Put Up as Collateral?

auto | excel capital managementHard Money Business Loans, as mentioned, are given to businesses that have shown steady and stable operating history. The business must also possess assets that can be financed and have not been put up as collateral to another lending institution. In addition, the company must not have any serious legal or tax issues which could impact the loan. Here are a few other pieces of information to be aware of:

– Accounts Receivable are the main type of collateral used to obtain an Hard Money Business Loan. Other forms of collateral such as equipment, real estate, inventory, and more can be used depending on the alternative lender’s restrictions and requirements.

– The Hard Money Business Loan amount you are approved for is determined by the value of your collateral/assets. Businesses can generally borrow 75% – 85% of the value of their accounts receivable. If the collateral a business puts up is equipment or inventory, they can generally borrow 50% of the value.

– Most businesses are approved for an Hard Money Business Loan in the amount of $500,000, and this number can exceed well into millions of dollars. Alternative lenders offer far lower interest rates than traditional banks, however, these numbers vary depending on the lender.

 

Applying for a Hard Money Business Loan

You may hear the phrase, “do the due diligence” a lot when researching 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 – who can off your a great Hard Money Business Loan. 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, and you will be ready to move onto the next step.

Generally, regardless of the industry type, as long as your business has decent financial statements, collateral, customers that pay on time, and reporting systems, obtaining a Hard Money Business Loan shouldn’t be too difficult. An added benefit is that this type of funding solution comes with regular fixed payments and lower interest rates compared to a traditional bank loan. This means less worries and more time to focus on your business and its success!  

Typically, most lenders that offer Hard Money Business Loans only require minimal paperwork in order to present your business with an initial 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

Keep in mind, that because this type of loan is asset-based, additional documentation will be required, however, it is still much less than traditional bank requirements.Many Hard Money Business Loans have $750,000 to $1,000,000 in collateral requirements.

For more information on Hard Money Business Loans, contact one of Excel Capital Management’s funding specialists at 877-880-8086 or APPLY NOW!

TrakLoans: How They Can Help Your Small Business

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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!

Summertime Sadness: How to Curb Slow Summer Business

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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! 

Funding: Venture Capital vs. Working Capital

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Funding: Venture Capital vs. Working Capital

Most business owners will apply for some sort of capital at least once over the business’ lifetime. This capital can be used for various reasons at various stages of the business life cycle: business start-up, expansion, equipment, purchases, hiring, etc.. When it comes to the growth of any business, money is essential.  What the capital is being used for determines just what type of capital it is – venture or working – and how one goes about acquiring it. No matter what though, as a business owner it is important to do your homework and know what type of funding you are applying for and how it can affect your bottom line in the long run. Let’s take a look at the difference between venture and working capital funding and the funding process for each.

VENTURE CAPITAL FUNDING

Venture Capital is normally sought after by up and coming business owners that are early in the life cycle of their endeavors  – startups and seed stage – but can also be used by business owners who are later in the business cycle but are looking to fund new ideas. If these types of business owners can’t get the money from a friend or family member who believes in their idea (business means big bucks, and a lot of times close acquaintances just can’t help out) they are usually able to do so through a Venture Capital investor who strongly backs their business plan. What complicates this process is the fact that most investors will want to see revenue generated for the long-term. They are now part owner and in it for the long haul just like the main business owner themselves, generally looking for a return of at least 5x their initial investment amount.  

Venture Capital investors or companies will analyze to see if there is a market for a business owner’s idea. If they feel that your business won’t be success, they most likely won’t take the risk of investing any money into it at all. Their goal is to see a big profit and have a hand in many major business decisions. It’s usually not simply a labor of love. Expect for investors to ask for a C-Level title and/or seat on your board of directors if you have one. At the very least, they will usually ask to be an “owner.” This results in relinquishing full control, ownership and an agreed upon percentage of future earning until you have enough capital to buy them out.

When it comes to qualifications, Venture Capital investors or companies typically only fund businesses in the amount of $1M or more, and also only fund specific industries which puts limitations on many business owners. They tend to look for big industry-specific companies with big, commercial ideas, a strong team, and some existing momentum and paying customers. This can be great, however, if you are just starting out, run a company on your own, or don’t necessarily have the plan to back up such a large sum of money, this can prove to be extremely overwhelming. Garage Technology Ventures, an early-stage venture capital funding company highlights the specifics of these qualifications in their article Critical Factors for Obtaining Venture Funding. Aside from all of  this, finding a reputable investor in itself can be a tough task. You should always do extensive research to ensure the investor has you and your business’ best interests at heart. Vivek Wadhwa’s article, Venture Capital: The Good, The Bad, and Ugly on Bloomberg.com highlights some other important factors when it comes to considering Venture Capital. Check it out.

WORKING CAPITAL FUNDING

Working capital is sought after by business owners for any number of reasons during any stage of the business’ lifetime – including the startup stage (normally lenders require a business must be operating for at least 3 months, but this can still be considered the startup stage). The capital is usually used for equipment purchases, new hires, expansion, inventory, and more. While lenders generally do care about the product or service the business offers, what business owners do with the capital (within reason) is their business. They are no way, shape or form now an owner after funding a company and don’t require that you list them as an owner, sponsor, or member of your board of directors. You make all of the business decision and once the funding is paid back their is no further obligations.

Typically, to qualify for working capital funding by a lender, a business owner must provide 4 months of recent bank and credit card statements (if applicable) to show their ability to pay back the advanced money. This capital acquired is generally structured as either a loan with fixed payback terms and fees or a purchase of future receivables at a discount rather than an investment expected to generate 5x the initial amount. Most business owners sleep a little better knowing this much and even reach out for additional capital numerous times over the course of their business’ lifetime. Lenders tend to develop genuine and trusting working relationships with many business owners and offer various financing solutions to work harmoniously with a business.

At Excel Capital Management, we offer many different financing products to help you obtain the Working Capital your business needs to grow! Our funding specialists will work diligently to ensure that you receive the best products available to achieve business success!
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How A Business Loan Helped a General Contractor in a Crunch

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How A Business Loan Helped a General Contract in a Crunch

While the construction business is one of the oldest, most flourishing, and most competitive industries around, there comes a time when many of its business owners need access to working capital. The cost of equipment, materials, payroll, and slow turn-around rates trump the cash flow coming in, and many construction company owners find themselves weighed down by bills and overhead costs. Since the great recession of 2008, a traditional bank loan is no longer the go-to solution when it comes to acquiring capital. That old-school way of doing things sometimes ends in heartbreak due to waiting weeks just to receive an answer. That’s where the alternative financing industry comes into play!

With financing solutions such as the ever-popular Merchant Cash Advance, ACH Loan, Asset Based Loans, Equipment Financing, and more, access to working capital is easier than ever! There is no longer a stigma with taking a loan or any type of financing. Working capital is essential when it comes to growing a company of any kind, especially a construction company. Due to the cost of machines and equipment sometimes reaching well into hundreds of thousands of dollars, or the burden imposed by having contractors absorb the upfront costs when starting a job – such as the cost of construction materials like granite and wood – and not to mention, insurance costs and payroll for workers and employees, construction company owners should expect to reach out for capital at some point in their business’s lifetime. Some companies choose to do this more than once, and why not? If working capital is increasing your cash flow and allowing you to take on more jobs, it only makes sense to ask for more. Afterall, the goal most of us strive for is to ensure steady work flow and income for years to come.  

Recently, Marty, a construction company owner from Georgia reached out to my company, Excel Capital Management. Marty was in a crunch and in need of funds, and he needed them fast! With a handful of projects on his plate, along with receivables due to a form on a large ongoing project  not being paid on schedule, Marty asked us for working capital to be used towards the purchase of materials, construction equipment, licensing for projects to be completed, and payroll.  As you know, only a small fraction of projects pay upfront and most only payout in tranches after certain milestones are hit at. When workers and office employees expect to be paid, and materials need to be purchased, waiting for these payouts is not an option. In order to get things back on track, as well as to generate new growth, Marty asked our sales rep, Jordan Lindenbaum, for help in securing an ACH Loan Product – a short term funding product  paid on a daily or weekly basis by direct Automated Clearing House debits.

Marty’s situation was a tough one! He was owed close to $200,000 which was tied up and not coming in for at least thirty days, plus around $150,000 in retainage for completed contracts,  however, that was going to be payed out over six months. He also had both a  $2 million and a $1.5 million contract on the table respectively (both carrying a 20% gross profit), but those were not set in stone. Marty’s company had no time to wait with other projects lined up and needing to be completed by early 2016, however, they couldn’t be completed unless he had the means to hire more workers and purchase a few machines to keep up with the timelines in place. Obviously, without the aforementioned payouts, he was in a bind. To the Average Joe, these type of accounts receivable amounts seem amazing, but in the construction business, we know this revenue doesn’t always reflect the tangible finances. Most, if of not all, of the money is put back into the company to complete ongoing projects. Whether Marty could wait until his pay day or not – he needed some additional working capital, now.

After supplying us with a few bank statements, a business lease, his driver’s license, and a few other minimal stipulations, we were able to get Marty $80,000 in working capital in a matter of only two days! The daily repayment amount was only $400 per day – an ACH automatically debited (so Marty wouldn’t have to worry about making any large monthly payments – he could focus on his projects at hand) which would happen over the course of 12 months. It was as simple as that! No hassles or phone calls from banks, just a solid relationship with an alternative financing company, such as Excel Capital Management, and peace of mind.

Everyone needs a little help here and there, and there is no shame in asking for it. There’s more hope than ever for small to mid-sized businesses when it comes to acquiring working capital. Whether you need $5,000 or $5,000,000, there are options. Most of today’s top CEOs have taken loans or received working capital in order to grow their companies into multi million dollar corporations. You know the old saying. “It takes money to make money!”

The Excel Interview With deBanked’s, Sean Murray

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Debanked

Merchant Cash Advance industry veteran, founder of deBanked, Sean Murray has been an influential part in funding over $100 million to small businesses through sales and underwriting efforts. As a Senior Account Executive at Bizfi (part of the Merchant Cash and Capital family), he grew one of the largest residual portfolios in the history of the company and become a well-respected expert in the industry. After his time at Bizfi, Murray founded Raharney Capital, providing advertising and consulting within the alternative lending industry, and also deBanked – the most popular magazine and resource in the industry where Murray also serves as the Editor-in-Chief. Excel Capital Management recently sat down with Mr. Murray to explore his vast knowledge of the Merchant Cash Advance and alternative finance industry and discuss the future of the business.

deBanked sean murray

Excel: Tell us a little more about your background and what made you get into the alternative finance industry.

Sean: I got into this industry almost immediately after college. That was 10 years ago. A friend of mine told me there was an opportunity to work at a fun financial startup. The job description entailed evaluating small businesses for working capital, ones that had mainly been declined already for a bank loan. Given that I double-majored in Accounting and Finance, I was definitely intrigued and took the job.


Excel: You’ve been in this niche industry for quite some time. Over the years, how have you seen the industry change and grow?

Sean: In the beginning, the worst part for the small business owners I spoke to was that approval terms were tied entirely to their average monthly credit card processing volume. That meant if cash sales were 90% of their business, we couldn’t consider that, even if that cash was showing up in their bank statements and being declared on their tax return. Over time, funding providers became more creative and flexible. They found ways to better service clients without making it impossibly hard to qualify.

Excel: Did you ever expect the industry to become as popular and as competitive as it is?

Sean: Yes and no. Given that I started before the Great Recession, there was already a big need for non-bank alternatives. The industry already existed and was growing. It wasn’t a byproduct of an economic downturn, it just became more visible during one. People think that when the economy fully heals, that banks will start lending again and the non-bank alternatives will disappear. The truth is that banks never serviced this segment of small businesses. It was and remains to be too expensive, risky, and time consuming for them to underwrite a $20,000 business loan. Sure, they’ll issue you a business credit card, but that’s based on your personal credit, is personally guaranteed, and more often than not the limit is too low. So no, I am not surprised that the industry has become so popular but I am surprised the product mix available to business owners has diversified as much as it has. It’s truly incredible.

sean murray interview
Excel: In the latest issue of your publication, deBanked, you provide a few predictions on the future of the industry. You specifically mention the fact that it is an election year and touch base on the current state of the stock market. Can you elaborate on these topics and how they relate to the industry?  Also, speaking of the election, Democratic candidate Bernie Sanders has stated that he will impose nationwide interest rate caps that would, in the long run, hurt marketplace lenders. What are your thoughts on this?

Sean: I think what I was trying to say was that a new President sets the regulatory and legislative “tone.” This year we have a colorful group of candidates, many of whom have big ideas on how to grow the economy. Bernie Sanders in particular has made some pretty controversial statements, one being that he is in favor of a 15% federal interest rate cap on consumer loans. I think many people when they hear that, assume that would mean that a lender that normally offered a borrower a 28% interest rate loan would instead offer a 15% interest rate loan to comply with the cap. That’s not what would happen at all. Instead the lender would just decline the application. In effect, a huge portion of the population would not be able to get a loan from anywhere, not even non-bank alternatives. You know the saying, “it takes money to make money?” That goes hand in hand  with the “rich get richer while the poor get poorer.” Borrowing can be used as leverage to grow and in essence become richer. It takes money to make money. If you’re locked out from borrowing, supposedly for your own good, how do you become richer if your risk profile makes it legally impossible to take money and make money? That’s obviously a larger debate but it all feeds back into the upcoming election and who will be running the country. What will their economic views be? And will that “tone” positively or negatively affect small businesses? Nobody likes the uncertainty in the meantime.

As for the stock market, the connections are easy. Declining stocks increases the allure of investing on peer-to-peer platforms where the returns are perceived as both steady and rather lucrative. It can be hard to stomach a 10% loss in your investment portfolio in a matter of weeks like the stock market did in the beginning of this year. Investors, even small retail investors are going to consider alternatives like this industry. A declining stock market also chips away at wealth and this can affect consumer buying behavior which would impact small businesses. It’s all related at the end of the day.

Excel: Along the same lines, what are your the thoughts on the alternative finance industry being regulated? Do you see this happening anytime soon? If so, how will these regulations affect business?

Sean: I think regulation, if any, will focus on disclosure and transparency. If this is indeed where it goes, I just hope the outcome is intelligent, well thought out and logical. It’s early days right now though so it’s hard to speculate. In business-to-business transactions such as the kind your company engages in, I’m a big believer in the invisible hand. It’s commercial finance, not consumer finance. Some of these businesses might be really small, but we’re still for the most part talking about corporations entering into contracts with other corporations. I think regulations should focus on consumer lending, where there is a much lower presumption of sophistication.

Excel: Moving forward, what impact do you believe the collaboration between OnDeck and Chase will have on the industry as whole?

Sean: From what I know about the partnership and from what I know about banks, I believe Chase is probably using this as an opportunity to fast track their online loan underwriting process while they figure out a longer term technological strategy. You have to remember, it’s not uncommon for banks to be using really old systems. I believe some are still using or have just moved away from Windows XP recently. That’s a 15 year old operating system. Between that, constant bank mergers where the acquired banks are using completely different systems, regulations, and the sheer size from a human resources perspective, all make it nearly impossible to catch up, let alone implement a modern underwriting platform that measures 10,000 data points with connections through all sorts of APIs. The easy solution for now is to use a company that can reliably provide that capability and I think it’s great that OnDeck’s platform instills a level of confidence that a famous bank like Chase would attach their brand to. I think OnDeck and others will score more of these partnerships and there is potentially a play for one to be ultimately acquired by a bank just for the technology.

Excel: As this industry continues to grow and more people are entering the market, what is one piece of advice you can share about the do’s and dont’s of our marketplace?

Sean: Do be responsible and act with integrity at all times. Don’t think you are too small or insignificant to make a difference. If you only help fund one small business and they hire new people as a result, there’s a chain reaction that occurs that affects the entire local economy. It’s a beautiful thing to play a role in that.

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