Don’t accept credit cards? No problem! With our ACH Program, you can still receive the funds you need to grow your business! This program is based on your total gross of sales. The ACH Program allows you to sell your future receivables at a discount rate. This program gets paid back by taking a small daily fixed amount from the bank account (business days only) until the advance is paid off. Looking for a longer term? No problem! Most companies offer 4-6 month terms, we can offer you up to 24 month terms!
If you’re a business owner, you may have heard about ACH loans or an ACH program, or you may accept ACH transfers as a payment method. ACH loans and programs offer alternative financing options for many, but what exactly are they? And are they right for you?
Making financial decisions like this always requires research, which is why we’ve put together the basics of an ACH program, the benefits, and how you can make the best decision for you and your business.
What is an ACH and What Does ACH Stand For?
ACH stands for Automatic Clearing House, and the first United States ACH came about in 1972 in San Francisco. These clearing houses were established as a radical change from paper checks, and in 2001, ACH payments became available for owners online. Since their origin almost half a century ago, ACH programs and loans have only continued to grow in popularity.
So what exactly is are these types of payments? An ACH is a computer-based electronic network used for processing various transactions. Typically these are low-value payments, as the fees are often set up to be marked down enough to encourage smaller amounts. The system is set up to process several batches of payments with many transactions quickly.
What Are ACH Loans?
An ACH loan is an option for short-term business financing. Sometimes referred to as an ACH advance or cash flow loan, ACH loans usually are smaller and have faster repayment periods. This is done by the lender taking a small, fixed amount of money from the bank account each business day until the advance is paid off.
An ACH program lender will consider the number and amount of credit card or debit card transactions you make each day, going back several months to get an idea of your average closing balance. This helps them determine how much of a loan to give.
Though many companies will only offer 4-6 month terms, some will offer up to two years. Because they are usually short-term, an ACH program can be best for business owners who may be experiencing some cash flow gaps or irregularities. They are also suitable if there’s a promising business opportunity you couldn’t otherwise afford or if you need to pay for short-term seasonal help.
What Are the Benefits From an ACH Loan?
There are many different benefits for those considering an ACH loan. Some of the reasons people like them are as follows:
- They’re easy to qualify for
- Required for credit scores
- Offer quick approval
- Payment scheduling
- Lack of collateral requirements
- Fixed payments
One of the most popular parts of ACH Loans is that they don’t require credit card checks. Traditional bank lenders will need you to have a near-perfect FICO score if you want a loan, especially a large one. This can make them much more difficult to obtain than it is to join an ACH program.
Because of that direct access to your bank account, the lender is taking on a lower risk by offering the loan. The trade-off is that this typically makes the interest rates on an ACH loan slightly higher than a traditional one, but usually not unreasonably so.
Another benefit of the ACH loan is speed. After your application is approved, you will likely get your funds through direct deposit in just a few days. This is especially important if you are using the loan to deal with an emergency expense. With that, many ACH programs don’t ask for any upfront collateral so that you can use all your funds the way your business needs.
For many, the automatic, daily take-out of the loan can be a benefit. With this feature, business owners won’t have to take time to go into an account each month to pay out the loan. Additionally, if your business increases, you can often readjust payment so that your loan is paid off faster.
How Do You Get an ACH Loan?
A few things are typically required to get an ACH loan. For almost all ACH programs, the business must have been in business for several months, and the majority owner (the person applying) must be bankruptcy-free.
For some lenders, a minimum monthly revenue is required, often around $12,000, which will help the lender decide on the loan amount. Typically, a loan won’t be higher than double your monthly income.
If you meet the ACH program’s minimum requirements, all that’s left to do is apply. This is usually a simple, stress-free process that requires a one-page application.
Are ACH Loans Right for You?
An ACH program and loan can be great, depending on your small business needs. If you’re not sure if an ACH loan is precisely right for you, consider taking advantage of a free consultation to discuss the options available with a professional.
- In business for a minimum of 3 months
- 1 Page Application
- Last 3 months of bank statements (All pages)
- Last 3 months of CC Processing statements (Only IF you accept credit cards at the business)
- And other information is required after accepting a pre-approved offer
Merchant Cash Advance
A merchant cash advance is a business cash advance program that provides you with capital by purchasing your future credit/debit card sales.
Don’t accept credit cards? No problem! With our ACH Program you can still receive the funds you need to grow your business!