Fast Business Loan
A fast business loan can solve a cash crunch today and create a bigger one a few months later. I’ve seen customers get pulled into a quick advance with payments so aggressive it nearly cost them the business, and they never even ran it by their accountant first.
I sat down with Gerri Detweiler from Nav for this one. She spends her time helping business owners build real business credit so they have options when the unexpected hits. Keep reading and you’ll see exactly where these fast loan traps come from and how to build credit that protects you instead.
What You’ll Learn…
- How a fast business loan can quietly cost far more than the rate you’re quoted
- Why banks are eager to lend money the moment you don’t actually need it
- The vendor relationships that build your credit without you even noticing
- What happens to your options once you wait until you’re desperate to look for financing
- How younger owners are missing out on credit building by skipping the relationship side of banking
- The one habit that keeps you ready for financing before a crisis forces your hand
Key Moments…
[3:09] What A Factor Rate Really Means For A Fast Business Loan
[6:58] Why You Can’t Refinance Your Way Out Of A Cash Advance
[10:24] The Right Time To Set Up A Bank Line Of Credit
[17:35] Getting Your Free Business Credit Score From The Bank
[21:38] How Vendor Relationships Quietly Build Your Credit
[26:03] Asking For Better Terms Instead Of A New Loan
[31:53] Checking Your Business Credit Score For The First Time
[35:24] The Profit Leak Hiding In A Cash Only Business
The Hidden Cost Behind A Fast Business Loan
A merchant cash advance gets pitched like a fast business loan, but it’s not really a loan at all. It’s an advance against your future sales, repaid through a cut of every payment that comes in, often daily.
The cost gets written as a factor rate instead of an interest rate, and that’s exactly where it gets sneaky. A factor rate of 1.2 sounds harmless next to a credit card’s 20 percent rate, but once you convert that to a real annual rate, you can land anywhere from 35 percent up to over 1000 percent. Gerri has seen those numbers firsthand.
Why You Can’t Pay Your Way Out Early
Once you sign for an advance, the full amount is locked in immediately, factor rate and all. Paying it off early doesn’t lower what you owe. The lender keeps collecting the full agreed amount no matter how fast your original cash need gets solved.
I think about a customer who got one of these and the payments grabbed so much of his working capital every week that it nearly put him out of business. He never asked his accountant first. He found out the real cost the hard way.
Build Your Credit Before You Need It
Gerri pointed out something I see all the time. Banks love to lend money when you don’t actually need it. The time to set up a bank line of credit is when your revenue is good and your financials are strong, not when you’re already stressed.
A few things worth setting up while business is steady:
- A bank line of credit, opened while you’re healthy, so it sits ready before a cash crunch hits
- Strong vendor relationships, since a vendor who reports to business credit can help your business credit score just by paying them on time
- A clear picture of your own business credit score, since most owners have never even checked it
The Profit Leak Hiding In A Cash Only Business
If you’ve run your business cash only for years, your business credit score may not even exist yet. That sounds harmless until you need financing fast and find out you have no history to show a lender.
Building business and personal credit at the same time, especially in the first few years, gives you real options instead of whatever desperate offer you are able to cobble together first.
About Gerri
Gerri Detweiler is a leading, nationally recognized credit and financing expert with nearly 30 years of experience. Today, Gerri develops educational programs and content for small business owners as a consultant for Nav, a financial and credit health platform providing a dedicated space for entrepreneurs to build and manage their business and personal credit, track cash flow, and understand their finance options before they apply.
Connect With Gerri Detweiler:
Visit Gerri’s Website
Follow Gerri on Instagram
Connect with Gerri on LinkedIn
Follow Nav on LinkedIn
Follow NAV on Facebook
Access Gerri’s Free Build Business Credit Guide HERE.
Diane’s Resources:
🤑Add $200k In Profits Without Chasing Leads
Sales are rolling in, so why does your business still feel broke? Here are 15 ways to add profit back into your Home Service Business without more leads & sales. https://profitcoach4you.com/profitleaks
Profit Impact Call
☎️ Let me find $45k in hidden profit leaks in your home service business in 45 minutes during a Profit Impact Call. https://taxcoach4you.com/profitimpactcall/
Schedule a free Profit Impact Call with me where we’ll go over 12 main areas of your business together and save you $45k!
