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What Counts as an Existing MCA Position?

When applying for a merchant cash advance, funding sources look at the current loans you have to see if you already have an existing advance.  But what counts as an existing mca position?

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Other funding types that may be considered an existing position by lenders:

Daily repayment advances such as
bank statement loans

  Weekly payment financing.

  Monthly payments loans from certain lenders.

  Programs that accept existing positions

  Multiple existing positions O.K.

  No penalty for other debts that are not mca’s.

Business funding that do NOT count as an existing mca position.   

1. Installment:

Monthly or weekly installment transactions should not count as an existing position when applying for a cash advance.

Example:Monthly payments for car and personal loans are almost never included in the approval process.

2. Monthly repayment:

Anything that is repaid monthly is almost always considered a separate type of financing.

Most installment loans also have monthly repayment, but not all.  These will not be counted against your existing debt on an mca application.

3. Secured:

Secured loans are not considered in your businesses’ ability to repay a short term unsecured advance.    It is a different type of debt and not calculated in the analysis.

Existing real estate and equipment debt, as well as accounts receivable financing are not counted against you.   As a result, they will not affect your ability to get an advance, nor affect the amount of the advance.

4. Unsecured Revolving Lines

Unsecured lines such as credit cards and personal lines of credit are not included.     You can have multiple credit cards or lines of credit because they don’t affect your ability to get an advance against future receivables.

Different terms between the two are a main reason they are separated because  unsecured revolving lines usually remain open for years.

Short term advances are paid off in 3 to 9 months.    Underwriting knows that you will continue to have that unsecured debt with a minimal monthly payment that is low compared to the advance.

Make sure the new lender is not counting loans or advances you have already paid off.    Provide them with a payoff letter on all previous debts that no longer have a balance but may still show one on your credit bureau.

existing mca position
What counts as an existing mca position?

FAQ: Frequently asked Questions on an existing mca position.

What is an existing mca position?

An existing mca position is business financing that is considered the same type as a cash advance.   This is usually any financing with a daily or weekly payment.  Some monthly payment options may count as an advance, depending on who the lender is.

What business loans count against me when applying for an mca ?

Any business financing that has a once per business day repayment is almost always considered an existing cash advance position.

Do other monthly payment loans count against me?

Other monthly payment business debt does not count against your mca application.

Why does it matter if my business already has cash advances?

New lenders need to know if your business will have the cash flow to pay the new debt.   They also consider if you are a habitual cash advance borrower.  Lenders probably consider you may take another advance behind theirs.

Conclusion

Short term daily, weekly and sometimes monthly business financing do count as an existing mca position and therefore, your business may not be approved or for lower amounts.

Know the types of loans you already have when applying for cash advances and which one will count against.    This will help you understand which type of business loan to apply for and what to expect.

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Business Tax Extension Loan For October 15th 2022

Do you need a business tax extension loan to pay taxes by an extension date and haven’t come up with the funds?

Leverage the assets or cash flow of your business to pay IRS business taxes by October 15th, 2022.   Several unique programs available, below now!

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Apply above to: Pay IRS business taxes by the October 15th, 2022 extension. 

Multiple Programs to get approved through. 
Flexible criteria. 
Fast funding and closing. 

Business tax extension loan
Get a business loan to pay the IRS extension deadline of October 15th 2022

Need the money to pay the IRS October 15th 2022 deadline?  Get your business tax extension loan now!

Several relatively unknown programs available.  Due to this year’s April 15th 2021 regular filing date extension, the new filing date is October 15th 2021.
The October 15th, 2021 extension deadline is NOT extended. 

1. Funding against the equipment your business owns. 

Businesses that have construction equipment or over the road tractor trailers can use their equipment to pay tax extensions.

You can get between 40% and 60% of the retail value of the equipment, depending on the year, make, model & condition.

Example: Your business owns a 2010 John Deer Front End Loader with a retail value of $60,000.    Based on a 40% Loan to Value, the offer would be $24,000.    The percentage will depend on the condition of the asset, maintenance records and the results of a site inspection.

A 60% valuation would give an offer of $36,000.    These ranges may vary from lender to lender.   The difference is that most lenders will not make this type of loan at all and it is also considered a specialty business loan.

Traditional banks will rarely make this type of loan.  When they do, they typically only offer approximately 10% – 20% of the value of the equipment and require real estate as part of the loan.

Therefore, if your business has to have money to pay the IRS extension amount and gets any offer close to that range, it should be strongly considered.

2. Funding against business property. 

When the IRS amount your business has to pay is high, then you may need to use business real estate.

The real estate will need to have at least 50% equity in order to have a chance to get the amount you need.    A 50% equity requirement seems like a high number.   Most lenders do not loan against 100% of the value of real estate and 65% to 85% is the maximum.

It is hard to qualify to get a loan to value higher than 70% or 75% of the appraised value.

3. Funding based on the cash flow of your business.

Another option is to fund against the cash flow of your business.  This may be the best option for businesses that are asset poor.

For Example: Your business has limited assets but strong business revenues.  You need $25,000 to pay by October 15th,  and business annual sales are $300,000.

Based on getting approximately 50% of monthly sales, $25,000 X .50 = $12,500.     An average offer will be approximately $13K.    Offers in this example could range from $10K to $30K depending upon other factors.

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FAQ Business tax extension loan 

Can I get a loan to pay business taxes by October 15th ?

There are several programs your business can choose from to pay
October 15th, 2022 business taxes.    Consider programs based on your company assets or cash flow. 

What if we can’t pay the full amount of the extension?

Refer to your Accountant.   Typically,  accountants recommend filing the return, paying as much as you can and communicating with the IRS on a payment plan.  

What can we do if we don’t qualify for enough to pay for the October 15th extension?

You may qualify for more than 1 type of loan.  A 2nd type of loan may allow your business to get the extra amount needed to pay the IRS extension balance.

Conclusion

If you need a business tax extension loan to pay October 15th, 2020 quarterly taxes quickly, look at alternative solutions.

Getting a business loan approval when the use of funds is to pay business taxes is harder to get than for other reasons.   Look at less well known options mentioned above, including  based on assets and cash flow.

Leverage the strengths of your business to get as many options as you can.  The business loans you qualify for may not be the ones you prefer.   Be open to alternatives and your business has the best chance to get money to pay the IRS or State tax extension balance!

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Proof of Income: All the Ways To Prove Income

Proof of Income

Definition: Documentation or other evidence that is used to prove the income of an individual or business. Apply below for business loans that assist business owners with proving their income.

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Examples of Proof of Income: 

A business owner applies for a business loan and is approved.
One of the closing stipulations is to show evidence of income.  The following is a list of the most accepted forms of proof for businesses and individuals:

1. Employer Pay Stubs
2. Tax Return
3. W-2 Statement
4. W-9 Statement
5. Bank Statements
6. Other Deposit Account statements

Need an E – Z and fast proof of income loan?  Complete the Secure App below now! 

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Did you know?

Proof of your income is required for larger loans, such as a large business loan or personal loan.

If a business owner cannot show documentation of income, they can consider other types of business loans that may not require it, such as certain asset based loans.

Customers cannot always show the type of documentation of income that is being requested.
What if you cannot provide documentation of your income? Then see our FAQ Frequently asked questions below.

FAQ proof of income

What is proof of income?

Proof of income is documentation used to verify personal or business income.

What is accepted as proof of income?

Employer pay stubs, tax returns, business or personal bank statements and other account statements are usually accepted as proof of income.

Why do I have to prove my income?

It is often required to verify you can make future payments that you are not making now. This is often for a new car, apartment or mortgage payment. It is also requested for personal and business loans and when buying into franchises or selling a business.

Can I add my spouses income to my income?

You can add spousal income to yours when you represent it as household income. List your income alone when you apply for something individually. If you do not have income and are applying alone, itemize it as spousal income or household income.

Can my credit prove my income?

Good credit shows you have enough income to pay the debts on your credit report now. It does not show if you can pay new debts or loans. The credit report also does not include all of your monthly expenses.

Are bank statements proof of income?

Bank statements may be used to show gross income or receipts. They cannot show all business or personal deductions from your gross income, or net income. Lenders wants to know if your business has the disposable income to service the new debt.


There are other funding Options.   Call us to discuss these options.

Proof of Income
What is Proof of Income?

Evidence of Income is requested for many reasons.  Most often they are completed when someone is requesting a product or service, or entering into a Contract or Relationship with someone else.   They are not always looked at the same way.   What is looked for is totally up to the party that is pulling the report and also what they decide about the information.

The following are frequent requests and statements:
– I do not have Proof of Income.  What can I do to provide what is needed?   Other ways to show evidence of income sending Bank Statements.  If all of a person’s income goes into 1 Account, then the most recent bank statements for that account may be used to prove income.  This can be done for a business or an individual.

In summary: Questions and issues addressed:
What is proof of income? How can I prove my income? Give your pay stub, copy of paycheck, tax return, or bank statements and other ways to prove income.

Learn more:

Recent examples from the Web:

Evidence of Income

Contact us today for program options.

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Business Credit Reporting

Business credit reporting is improved when you establish your business with the Secretary of State right away.

This helps later when trying to obtain a small business loan, because the time in business will show the original inception date in business credit reports such as Experian and Dun and Bradstreet.

That means you will be in business longer, officially.  That really helps you!

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Some business lenders generate auto decisions when reviewing a small business loan.

If incorrect and shorter time in business is showing on the business credit reports as part of the business credit reporting accessed by the lender,  this will be a more negative factor in the decision and can cause a lower approval, or even a decline.

Even in cases when the application is reviewed manually,  there are no guarantees  that the credit analyst will even realize, much less take the time to consider that the time in business is actually longer.

Unless a reviewer is aware of any additional facts, here isn’t any reason or motivation for a credit analyst to assume that the time in business is longer than what is showing as part of the business credit reporting.

As a result, the small business owner applying for a small business loan may be at a significant disadvantage in the small business loan process.

Contact the business credit agencies and make sure that the full time in business is being reflected.

Business Credit Reporting Resource page links:

Bureau of Labor Statistics – Provides companies with up to date information on employment, demand, hiring, productivity and other information that may be useful to companies.

More Business Credit Reporting resources:

Department of Labor – Provides information on many labor issues that can be useful to companies, such as insurance, regulation, wages, wage hours, compensation, safety and health

U.S. Patent and Trademark Office – U.S. office to file patents to protect a companies new or existing proprietary products.

U.S. Trade and Development Agency – Promotes U.S. Exports to Foreign Countries, please review if your company is interested in exporting goods to foreign countries.

Public Radio Planet Money – All issues money related to the public.

Thank you for visiting our business credit reporting resource page!

Small Business Loan Resources:

Thank your for visiting our Small Business Loan resource page!

 

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Sole Proprietorship vs Corporation

Sole Proprietorship vs Corporation

Is an S corp the same as a Sole Proprietorship?

No. An S Corp is a Corporation. A Sole Proprietorship is not a Corporation.

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By setting up a small business as a corporation from the beginning, the full time in business will be reflected with the secretary of state and with main business credit agencies.

Both Dun & Bradstreet and Experian business credit are major credit reporting agencies.    These reportings will later help the small business owner in their efforts to obtain a small business loan.

What is the difference between a Sole Proprietorship and a Corporation

A Sole Proprietorship is one indidual operating a business and are the sole owner of that business. They are not a Corporation and do not receive the protections and other benefits that being structured as a Corporation provide.

A Corporation is a type of company structure that is more commonly used for larger companies. This type of company structure affords certain important legal protections to the owners of the Corporation.

The Corporate business structure provides a strong barrier against owners being sued individually for damages.

A sole proprietorship is not listed with the secretary of state with most states.   Some states offer listing sole proprietorships under fictitious name certificate sections.

However, this is not the case with all states and even in the states which do list fictitious names, the section for finding these names is often not as prominent as the sections for corporations.

The result is when you are doing something important with your small business, such as obtaining a small business loan, setting up trade accounts, people will be looking for you.

When someone is looking for your business listing, you want them to find you. 

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