Types of Business Financing

Customer Education / Types of Business Financing

There are many pros and cons to consider when sourcing capital for your business.

Behalf is a Merchant Cash Advance, which is a working capital solution for healthy companies. Read below to understand how a Merchant Cash Advance compares to your other business funding options.

Merchant Cash Advance (MCA)

A Merchant Cash Advance (MCA) advances you money your business needs today, against revenues you know are coming in tomorrow. It is an affordable way to access working capital to cover the short term cash flow gaps many businesses encounter as they grow. Since the funds are advanced for a specific purchase and drawn directly from your incoming revenue on the schedule you set, you are protected from overextending. See how a Behalf MCA compares to other sources of funding below.

Business Credit Cards

Business Credit Cards are convenient, when your vendors accept them. However, you should carefully consider the cost implications of using a card to finance large purchases. When you don’t pay your balance in full, you will be charged interest on your Average Daily Balance – not just on the purchase you needed extra time. Any late payments can also trigger a penalty APR, which can double your finance costs.

Line of Credit / Business Loan

A Line of Credit or Business Loan may seem like an affordable option, but carefully review the fine print before proceeding. A straight interest rate comparison will not tell you the full story. You will often find origination fees, which are processing costs associated with underwriting, that can add 2-5% to the cost of your loan depending upon the bank or online lender. Some loans come with additional maintenance or inactivity fees, in which case you could end up paying for access to funds that you never use. It is important to understand the total cost of financing – not just the interest rate – before making credit decisions.

Using Behalf to fund your business purchases through a Merchant Cash Advance has no hidden fees. Behalf will assign you one fixed Advance Fee, from 1-3% per month, based on your credit profile. You only pay for the terms you choose, and your scheduled debits will be conveniently drawn directly from your business bank account. If you are a healthy company looking to increase your working capital so you can grow faster, Behalf may be right for you.

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