What are ACH Loans?
An ACH business loan is a term used to describe non-traditional business financing products that take a fixed payment usually weekly or daily Monday-Friday out of the business bank checking account for repayment. Bank loans also use the ACH payment process as well.
What Is an ACH? What Does ACH Stand For?
ACH definition: ACH stands for “Automated Clearing House” which is an electronic funds-transfer system run by NACHA, formerly the National Automated Clearing House Association, since 1974. This payment system provides automated clearing house (ACH) transactions not only for business funding payments but also for use with payroll, direct deposit, tax refunds, consumer bills, tax payments, and many more payment services in the United States.
The ACH Network essentially acts as a financial hub and helps people, industry, and organizations move money from one bank account to another. Recent rule changes are enabling most credit and debit transactions made through the ACH to clear on the same business day, which allows lenders to collect payments smoothly and efficiently. This process reduces risk
Short Term ACH Loans
Short term small business loans provide a fixed amount up front, with a fixed payback amount calculated using a factor rate over a short fixed term of time typically 6 to 18 months. Rates are based on a “factor cost” which is not principal & interest and costs more than traditional loans. Payments are deducted from the account either Bi-weekly, weekly, or in some cases daily Monday-Friday. The popularity of this type of financing is that the products require very little paperwork, simple payment process, and credit requirements are much more forgiving than traditional loans because they charge more for costs, are shorter-term and the payments are more frequent.
Rates: Factor rates starting at 1.09% up to 1.45% of the funding amount
Terms: 6 to 18 months in duration, typically 12 months or less
Fees: Origination Fees 0% to 5%
Payments: Weekly, Bi-Weekly, Monthly, and in some cases daily Monday-Friday
Credit Standards: Poor to Excellent credit accepted.
Special Features: Approval to funding can be same day to 24 hours
Documentation: Reduced Documentation. One page application and 3 months bank statements required
Benefits and Best Uses:
When you can’t get approved for more traditional financing products, short-term business financing is a great alternative that can come in handy for the business that is in need the money now but was turned down by traditional financing. Many owners view this option as a cash flow business loan.
Business Cash Advance
Business Cash Advances (also known as a Purchase of Future Sales Agreement or a Merchant Cash Advance MCA) advance a fixed sum of money upfront to a business with a fixed payback amount which is greater known as a specified amount. The advance is repaid by taking a fixed percentage of future overall sales deposits. Electronic payments are collected by an ACH fixed daily or weekly payment deducted from a business checking account which is based on the fixed percentage of future sales. After every month, if the fixed payments taken are more than the set future percentage of sales than a refund back to the merchant can occur. This daily or weekly repayment continues until the payback amount is paid back in full, therefore, there is no term limit with advances as the fixed payback percentage ever changes. The time frame to pay back depends on the volumes of future overall sales. Business cash advance documentation is limited to a 1-page application and 3 months’ bank statements. Although a cash advance seems to function as a business loan, it is not a loan, but a purchase of future receivables at a discount.
Rates: Factor rates starting at 1.09% up to 1.45%
Terms: No term limits
Fees: Origination Fees are typically 0% to 3%
Payments: Fixed ACH payments are weekly or daily Monday-Friday from checking account
Credit Standards: Poor to Excellent credit accepted.
Documentation: Reduced Documentation. One page Application and 3 months bank statements are all that is required.
Benefits and Best Uses:
Business Cash Advances costs are higher than that of traditional loans, but when credit and documentation are an issue with traditional business finance sources, business cash advance can be a great alternative. Although not a loan, this product is commonly referred to as a cash flow business loan.
Overall Benefits of ACH Loans
- Many owners use this funding product like a cash flow loan to help cash shortfalls
- ACH business loans provide additional capital in addition to a credit card. It also has less restrictive credit requirements as well
- Fast and simple payment process. The money funded same day to 24 hours
Qualifications for ACH Capital
- The bank account must be healthy. What we mean by healthy is that your average daily balance in your account can accommodate a loan payment without causing an overdraft or negative balance in the bank account. If your average daily balance in your bank account dips below the lenders requirements you may be denied an ACH loan.
- Must include a voided check so the lender can activate ACH loan payments and wire funds to a checking account.
Who Offers an ACH Loan?
- Marketplace lenders
- Online lenders
- Loan Brokers
- ACH Lenders
We offer a diverse range of loan products here at AdvancePoint Capital that you can take advantage of today. We provide information and credible loan options that you can rely on for your business. When traditional routes don’t work for your small business, we offer alternative solutions that can help you gain access to the cash you need to push your company forward. If you’re a business owner looking for a simple way to get fast and simple capital, you’re in the right place. Over the years, we’ve empowered countless small business owners with financing solutions that work with their goals.
Whether you’re looking for an advance or short-term business loan option, we’ll find a funding opportunity that aligns with your future needs. AdvancePoint Capital is committed to the growth and empowerment of small businesses seeking the right type of lender to help. If ACH loans aren’t what you’re looking for, we have other small business loan options that you can use to benefit your company,.
Give us a call or contact us today to learn more about our wide selection of loan products that add the convenient and speedy automatic payment process to your loan.
The fast, convenient and straightforward way to get the money you need for your business – now! Get Your Quote Today by filling out our simple form.
Frequently Asked Questions
Are ACH Loans difficult to obtain?
The short answer is No. Both Short-term loans and Small Business Cash Advance are easier to obtain than traditional business financing options. Even business owners have challenging issues such as credit, time in business, and other concerns that traditional small business financing would have — they still may be able to find a solution. These are flexible options with daily or weekly payment plans that can be a great solution for many businesses. Just make sure that you’re reviewing all of your options carefully.
Can I qualify for an ACH Loan if I have bad credit?
Yes, you can get approved for an ACH business loan with bad credit. Your options may be limited and the rates, costs, and terms may be affected by how bad your credit is.
Can I get ACH Loan with No-Docs?
The short answer is no. Due to the greater risks short term business loans and business cash advance takes you will be required at the minimum at least a reduced amount of documentation such as bank statements.
Can I get an ACH Loan if I am a start-up business?
The short answer is no, you cannot get a start-up small business loan without showing a history of revenue and your ability to manage cash flow through the current small business bank statements. Former business ownership experience in prior businesses will not help you. Make sure that you’ve checked all of the minimum requirements before going through any lengthy processes.
The Bottom Line: Advice, Tips, Warning’s about ACH Loans
Like any business financing, small business owners should still ask the question of why they need business financing. Is the need for business capital a short term problem? Do you keep enough money with your average daily balance in your account to handle an ACH loan payment?Was this a one-time special circumstance emergency or will you need working capital long term? Will your small business always need a credit facility as it’s just the nature of your industry?
Consider the questions above when choosing the business funding solution because the answers to those questions are not the same small business loan product to solve your cash flow concerns. Work with a company that has a large product line that can offer you as many choices as possible. An ACH loan should be considered part of a portfolio of loan options. When solving cash flow problems there is not a one-product solution. A reputable ACH lender should always explain all their business loan fees and loan terms to you. It’s also important that you read all terms upon receiving any agreement. As we always say at AdvancePoint Capital, compare, shop and you will always save!
How to Apply for ACH Loans?
AdvancePoint Capital can assist business owners in finding the business financing solution needs in our financing marketplace. We offer an easy ACH business loan experience that our customers love which is a fast, streamlined process and high approval rates that come from working with us.
We make the lending process easy when you apply for an ACH loan with AdvancePoint Capital. First, start with this online form, then fill out the short application page, wait a few hours for your approval, choose the right option, and then move forward to access your money!
The fast, convenient and straightforward way to get the money you need for your business – now!
Get your Quote Today by filling out our simple form.