What should I know about business loan solutions like OnDeck?

Are you sure you’re ready to get your business in debt?

Running a small- or medium-sized business is tough. Cash is king, sales are vital, and both require paying for people and product. When clients pay slow or sales cycles are long, you need to know your options for smoothing out your cash flow.

Fortunately, there are no shortage of options. Plenty of online lenders want to make it as easy as possible to saddle your business with low-risk/high-interest debt.

One of these on-line lenders, OnDeck, offers two financial products—term loans and lines of credit. Here’s what they have in common:

First, both of these OnDeck solutions are loans. This means either of these options will appear on your credit report. Also, just like going to a bank for a loan, you’ll need to meet several baseline requirements: minimum time in business, minimum gross annual revenue, and minimum personal credit score of the business owner.

Second, there’s a big cost to this cash. Each option is tied to an interest rate (it varies based on the solution you choose). There are also fees, like “origination fees” or “monthly maintenance fees.” Some fees are charged once, while other fees are monthly. Paying these fees doesn’t reduce the amount of interest or capital you owe.

Finally, both solutions cap the amount of money available to you. If you go with a term loan, the maximum amount available is $500,000, and the line of credit maxes out at $100,000. These relatively small sums have big APRs and fees attached. The average rate for term loans is a whopping 24%, for an AIR of 38%! What IS the effective rate? The average rate for the line of credit is 29.99%—compare that to the rate you get from a home equity line of credit! With today’s prime interest rate hovering around 4%, that’s a staggering upcharge for low-risk business loans.

What’s the ROI?

Before you jump into debt, ask yourself if the sum offered will help you reach your long-term goals, or whether solving today’s problems will lead to worse problems down the line.

Here’s our pitch. Porter Capital offers a different solution. We specialize in factoring because it’s a way businesses of almost any size and at any stage can improve cash flow and opportunity. Here’s how it works:

  • Deliver your product or service to the customer along with your invoice
  • Submit the invoice to Porter Capital
  • Receive up to 90% of the invoice amount within 24 hours.
  • When the client pays the invoice—30, 60, or 90 days later—you receive the rest of the invoice amount minus a much smaller factoring fee.

 

How does this benefit your business better than a term loan or line of credit?

1. This is your money, not a loan. It doesn’t appear on credit report. And, we look at the credit-worthiness of your customer, not your personal score. That means even startups are eligible!

2. There’s no interest rate or additional monthly fees. The cost of factoring is calculated on a per-invoice basis, so fees don’t compound, inflate, or otherwise sneak up on you.

3. There are no caps on loan amounts to limit your potential. With Porter Capital, our product offers financing from $50,000 to $10,000,000. We don’t want to limit your potential to grow, take advantage of opportunity, or cover operating expenses.

4. You’ll have a dedicated account rep who learns your business and can assist you when needed. You’ll have your rep’s direct phone number and email address so that you can connect with them whatever way works best for you.

5. Your account will be accessible online 24/7 and updated in real time so that you can always keep up with status of your invoices.

Porter Capital can approve your business quickly with an easy, streamlined process. Once approved, you receive your funds within 24 hours of submitting your invoices. And, our personalized approach allows for great flexibility as your needs change.

Financial decisions can seem daunting.

We’ll be happy to talk with you about your needs and goals and help you decide if factoring is right for you. We offer fast, friendly, personalized service, and our approach is simple and honest with no surprises. Call 800-737-7344 today, use the Live Chat option, or fill out the form below and learn more about Working Capital Overnight!

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