How Do Businesses Use ACH Loans?
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. We’ve listed a few common uses for ACH funding to give you an idea of just how beneficial these loans can be for your business.
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 businesses 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 your business running.
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 can leave businesses struggling to pay expenses. For those operating with smaller margins, awaiting receivables can put a small business in danger of failing. 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 of every business strategy. Building awareness and bringing customers 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.
6. Disaster and Pandemic Relief
During these unprecedented times, small businesses have experienced financial hardships. Maybe you’ve experienced a decline in sales since the start of the coronavirus pandemic, or maybe you’ve been dealing with increased costs of PPE and sanitation supplies. If your company has been impacted by COVID-19, we’re here to help.
Qualifying for a Cash Flow Advance
ACH loan eligibility works a little differently than alternative loan products, such as merchant cash advances (MCAs) or business credit cards. Our lenders look at specific criteria for loan approval, and 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’s not weighed as heavily as other top qualifiers. If your credit score is in the lower range, don’t be discouraged. Borrowers who don’t have strong credit scores can still get approved.
FAQ About ACH Business Loans
ACH loans tend to have shorter repayment periods than term loans. Payback time is typically between three and six months. They are intended to be a short-term financing option. Term loan amounts 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 don’t require direct access to your business checking account.