Learn How to Get an ACH Business Loan & Apply Online
Paper checks, like corded phones have met the same fate as the typewriter. The paper check, the exalted loan repayment method, is fast becoming a business tool with little practical use. In place of the written check, a slice of the innovative lending market has created a novel and viable electronic lending model: ACH Business Loans. The narrative that follows details how ACH business loans are changing the way small business owners PAY their monthly loan repayments.
ACH business loans refer to “how” a borrower repays a business loan, rather than a reference to a specific financial product. ACH business loans resemble the lending model of their distant cousin – the Merchant Cash Advance (MCA). Although, that comparison is like comparing apples to oranges.
An ACH loan is usually recommended for short-term financing scenarios. ACH business loans are generally more expensive, but this novel business model provides quicker access to necessary funds, than offered by a tradition business loan model.
ACH Business Loans, The Basics
Those financial institutions modifying the original business-lending model are called Alternative Lenders. Their lending archetype requires payments made on an agreed-upon automatic withdrawal basis -either a monthly, a weekly or a daily payment. Only a few lenders still give you the option of mailing in a paper check each month, so be careful if this is your preferred repayment method.
Most electronic payments pass through the Automated Clearing House network – the nation’s primary financial coordination system created to process Electronic Funds Transfers (EFT) on a national scale. The ACH is tasked with the responsibility of managing 90 percent of the value of all electronic transfers in the United States on any given day. The ACH is like a nationwide system that oversees a registry of debits and credits for its citizens and business entities; completed in a fraction of a second. What a huge responsibility!
The ACH also allows for increased security measures. This in turn, mitigates fraud throughout the many industries that interact with banks.
Small business owners have the option to receive creative ACH financial loans, that help meet their very specific financial objectives like:
–Funding is lightning fast when compared to traditional loans
–Lowered Credit Requirements
–The ability to sell a piece of the business’ future generated revenue.
–The ability to finance using outstanding receivables as collateral
The Various Ways to Repay ACH Business Loans
Most Alternative Lenders connect to the Automated Clearing House (ACH) via a checking account’s routing number or through a PayPal account. Each business loan lender creates the methodologies and time frames for their business loans, so, as one would expect, there are many repayment methods to choose from.
Some ACH business loan lenders mandate a monthly payment. While others require a daily or weekly repayment of a fixed amount from a business checking account via the . The options are plentiful so shop and around carefully.
When paying more frequently than the traditional monthly payment,( i.e. daily or weekly), each payment is smaller; although they are due more often. This is perceived as a benefit for business owners who find it more difficult to plan ahead for larger monthly payments. More frequent payments, established upon approval, allow for business owners to plan ahead.
Some alternative lenders prefer the borrower to repay the business loan digitally, but will consider paper checks, if the business’ financials meets their lending guidelines. Remember, though, the lender may now add a small transaction fee for the privilege of paying by check. Then, watch how quickly the fees grow should your check be returned for insufficient funds, or if it arrives in the mail a day late.
–Electronic payments offer a borrower a simple way in which to avoid late fees.
–Borrowers often receive some sort of lending discount as well, like a lowered rate.
If you find that your Internet research quest leaves some unanswered questions, contact us at LenCred to help you make your final choice about ACH Business Loans. We are ready to clarify the fine details of how ACH Business Loans work, and a way in which to apply online (with our help).
Our team of advisors are experts in the area of small business financing. We have the knowledge and experience that is necessary to help business owners find the business funding they are looking for.
General Industry Underwriting Standards
Underwriting guidelines regarding ACH business loans vary from lender to lender, but in general, a business owner looking for capital to finance their business should expect to meet the minimum standards noted below:
–Credit Score – No less than 500, which is a credit standard that is easy to qualify
–Length of Business Operation – at least a ½ year
–Checking Account Monthly Deposit – at least $10,000 per month
–Number of NSF’s Permitted Monthly – no more than three ‘Insufficient Funds’ (NSF) notices in any given month
–Application Fees –none
–Collateral – none
–Company Financials – usually not required
The lender takes on the initial risk (at application) because the applicant is in no way obligated to close a business loan that doesn’t meet their needs. The lender risks dedicating their resources to underwriting each and every application, with no guaranty that the loan will even be approved.
Applying Online for an ACH Business Loan
Around 80% of small businesses fail because of a lack of liquidity. In other words, they couldn’t get their hands on some cash when they needed it most. Recently though, the arduous task of applying for a business loan have been revised to a more simpler online process. The paperwork required for an ACH business loan has been reduced (and now, pain free) when compared to previous business loan application protocols.
LenCred offers an easy to follow online application process as well as quick turnaround times regarding preliminary credit decisions. Entrepreneurs and small business owners can apply for revenue based business loans, SBA loans, and business acquisition loans, amongst other types of business financing. Unsecured business lines of credit are also available for startup and established business owners and often are available with and low introductory interest rate.
LenCred makes it easy. Contact our team of professionals who are available to help any business owner understand the complex variety of loan products that fit their financial situations and needs.