Businesses that wants to expand operations, unroll a new product, or hire new team members can fund their project with the help of ACH business loans. These loans are popular funding solutions for small and midsized businesses because they provide quick access to working capital and they don’t need to put up any collateral.
Unlike traditional loans, many lenders, such as First American Merchant, will approve ACH business loans in just a few days. Startups and smaller businesses, which don’t have long business histories and have little or poor credit, also are drawn to these loans because they don’t require a minimum credit score to qualify. In many cases, if a lender finds your business to be strong and headed toward success, you are likely to be approved.
Prior to the Application
Before applying for a loan, figure out why you need the money, how much will you need, and if it is the right time to take on a debt. Create a plan that shows how you will use the money and how you will pay it back. Thinking about this prior to submitting an application will increase your chances of success.
How ACH Business Loan Money Can Be Spent
Businesses in many types of industries can use the working capital they receive ACH business loans to fund things, such as:
- Expand Your Current Space or Rent a Larger Place: Whether you have outgrown your current space and want to expand or you want to add another location, business capital can be used to pay for it.
- Buy More Products: Low inventory could end up negatively impacting your bottom line. With an ACH business loan, you can buy inventory in bulk to ensure you never run into a shortage of goods. Since buying items wholesale is often cheaper than retail, you also get to expand your inventory and save money.
- Hire New Employees: If your business is having a growth spurt, then you likely will need to recruit and hire new employees to ensure that your business can continue to meet all of your customers’ needs. You can use the capital to hire more employees or to even offer your current employees additional training or professional development.
- Develop New Products and Services: Customers’ needs are always changing, which is why you need to have a team with its hand on the pulse of what’s next so you stay ahead of your competitors. Funneling business capital into market research and product development is a good way boost your long-term revenue potential.
- Promote Your Products and Services: Once you have brought on new products and services, you need to get the word out. Working capital from an ACH business loan is a great way to pay for time-consuming, expensive advertising, marketing, and website development.
Applying for ACH Business Loans
Applying for ACH business loans are vaguely similar to applying for other funding solutions. After you submit your application, a lender will a few months of your bank statements to get a clear understanding of your average daily balances. Some lenders also may request your tax returns, balance sheets, and credit card processing statements. It is a good idea to have these documents readily available in case you do need them. These numbers will help determine the terms of your loan and the amount you can borrow. If you are found to be eligible for the loan, you will sign an agreement with the lender. The agreement will include:
- Amount of the loan
- Term of the loan
- Interest rate
- Fees for borrowing money
- Repayment amount and schedule (daily, weekly, or monthly)
ACH Business Loan Payment Collection
ACH business loan are repaid through fixed daily, weekly, or monthly paid via the Automated Clearing House (ACH), the electronic network for financial transactions in the United States, withholding method. Lenders withdraw the fixed amount from your company’s bank account according to the agreed up payment schedule. Another plus is that since the amount is fixed, you will never experience any unexpected withdrawals.
The Last Word
If you are a small business or a startup and you need quick access to working capital, then think about applying for an ACH business loan. Often, you can get approved in just a few days and will have money on hand to help your business grow and thrive.
Also, before you move forward with a specific lender, shop around. Find out as much as you can about the lender and then compare and contrast. You want to protect your business and its future. Signing on to a bad loan or one you don’t understand will be a major financial roadblock, so be sure to ask question, read reviews, and go with the one that works best for your specific circumstances.
First American Merchant makes the process simple by offering an online application. It is straightforward and quick.