Invoice financing is a type of low- or no-doc business loan that allows businesses to access funds almost immediately based on the value of their unpaid invoices. However, interest is only charged on the balance you use, not the full credit line. Borrowers can use business lines of credit for ongoing and long-term cash needs such as equipment purchases or investments in marketing campaigns.īusiness lines of credit typically come with lower interest rates than short-term loans (starting around 3%). Business Lines of Creditīusiness lines of credit are revolving loans that allow businesses to draw from an approved limit as needed. For this reason, MCAs are best for businesses with a high sales volume that can repay loans quickly. Interest typically accrues based on a factor rate of 1.2 to 1.5. Repayments are deducted directly from the merchant’s account, usually on a daily basis. Instead, they use the merchant’s credit card volumes as collateral and deduct repayments from future sales income. Unlike traditional lenders, MCA companies don’t rely on credit scores when assessing an applicant’s eligibility. Merchant Cash AdvancesĪ merchant cash advance (MCA) is another form of short-term financing that can give businesses quick access to cash for immediate working capital needs. Use a business loan calculator to determine how much you can afford to borrow before committing to loan terms. These loans are usually repaid over three months to three years and come with higher interest rates than the best small business loans-often between 7% and 50%.ĭue to their shorter repayment terms, short-term business loans typically come with high monthly payments that could become difficult to repay. Short-term business loans typically cover immediate cash flow needs, like inventory or payroll expenses. While totally document-free business loans are rare or non-existent, there are financing options that come with less rigorous application requirements than traditional loans. No-doc business loans allow entrepreneurs to access capital quickly and without having to provide extensive documentation for their loan applications. This reduces the risk that comes with lending out money, allowing lenders to offer no-doc loans at lower interest rates. Applicants can also sign an asset security agreement that allows the lender to use collateral as a guarantee for loan repayment if the borrower defaults on their payments. When applying for a no-doc business loan, lenders usually require only basic information such as identification documents and proof of income or revenue. This type of loan offers entrepreneurs the opportunity to secure financing quickly and with less documentation than needed for a conventional loan. No-doc business loans fund business owners who typically have difficulty securing financing through traditional banks. Therefore, while applying for a no-doc loan, providing sufficient information to the lender is crucial to avoid any last-minute surprises. Even though no-doc business loans are designed to eliminate the cumbersome documentation process, they still require some proof of revenue and credit score history. Instead, lenders base approval on factors such as customer credit history, collateral and the value of the borrower’s assets. Also known as asset-based financing or alternative financing, no-doc business loans give small businesses access to capital without extensive documentation of their income and assets. No-doc business loans are designed for entrepreneurs who don’t have the extensive financial documents lenders usually require. On BlueVine's Website What Are No-Doc Business Loans?
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