What Do Businesses Use ACH Loans for?
An infusion of extra working capital can be used for a variety of business purposes. How you choose to use your funding typically depends on your company's goals and objectives. Below are some common use cases:
1. Hiring and Training New Employees
Hiring and training new employees is an important part of growing a business. ACH loans can be used to help front the cost of onboarding and investing in new hires. Using the additional cash flow, small business owners can expand their business and secure top talent.
2. Bridging Cash Flow Gaps
Cash flow gaps are common when you’re running a business. Whether you’re dealing with an emergency, seasonal fluctuations, or a short-term dip in revenue, an ACH loan can provide the capital necessary to keep things moving.
3. Inventory Purchasing
Maintaining inventory is a necessary aspect of operating a business. ACH loans are a good option for business owners needing to restock supplies and place inventory orders. Whether you're planning to buy in bulk or place a small order for special items, Clarify has you covered.
4. Stalled Invoice Payments
Slow payments and delayed invoices leave businesses to temporarily foot the bill. For those operating with smaller margins, a stalled invoice payment can put small businesses in a tough financial spot. An ACH loan can be used as a short-term buffer, providing a quick infusion of capital while businesses wait for invoices to be paid.
5. Marketing and Advertising
Marketing and advertising are essential elements to every business strategy. Building awareness and bringing patients in helps contribute to the bottom line of every business. ACH loans can provide the capital necessary to build out and implement a strong marketing and advertising strategy.
Qualifying for a Cash Flow Advance
ACH loan eligibility works a little differently than alternative loan products. Our lenders look at specific criteria for loan approval. Average monthly revenue is the main qualifier.
Below are the factors we consider:
- Average monthly revenue
- Business bank account balance
- Average monthly deposits
- Time in business
- Credit rating
While credit score is listed as a factor, it is a relatively small one compared to other top qualifiers. If your credit score is on the lower-range, don’t be discouraged. Borrowers who do not have strong credit scores can still get approved.
Frequently Asked Questions about ACH Business Loans
ACH loans tend to have shorter repayment periods than term loans. Payback time is typically between 3 and 6 months. They are intended to be a short-term financing option, rather than long-term. Term loans are usually paid back over much longer periods of time.
The ACH advance is repaid through automatic and electronic withdrawals from your business checking account. For term loans, lenders do not require direct access to your business checking account.