Loans You Can Get with Bad Credit

By Adam Uzialko
Feb 28, 2020

If you have a bad credit score and need a business loan, these financing options could help you secure the funding you need.

  • Borrowers with good credit can usually access bank loans with favorable terms and low interest rates.
  • Less creditworthy businesses might have to turn to alternative lenders that offer more expensive financing options.
  • Using financing to stabilize your business and repair damaged credit scores is possible but risky.

Every business needs funding, and many turn to loans. Unfortunately, not every business has the sterling credit required to receive a loan from a bank with favorable terms and low interest rates. If your business doesn’t qualify for a bank loan, where else can you turn?

There is an entire industry of alternative lenders that aim to fill the gaps where banks are unwilling or unable to lend. However, accepting money from alternative lenders requires business owners to be savvy, lest they dig themselves deeper into debt.

What do lenders look for when considering a business loan?

When many businesses require funding, their first stop is the bank or some other conventional lender, like a credit union. These financial institutions offer a variety of financial products, including term loans and SBA 7(a) loans.

What does it take to qualify for a loan from a conventional lender? Typically, these financial institutions look for several things, including:

  • Credit score: For a business, there are two types of credit scores that matter: your business credit report and your FICO credit
  • A business credit score is tied to your Employer Identification Number (EIN), which can be registered with Equifax, Experian or Dun & Bradstreet. Each organization has its own method of calculating business credit scores; for example, Experian considers factors like credit utilization, size of the business, length of time in business, public records and the  owner’s  personal credit score to calculate a score ranging from one to 100.
  • A FICO credit score is your personal credit score, which ranges from 300 to 850. The FICO credit score is tied to your Social Security number and is calculated by three credit reporting bureaus: Equifax, Experian and A FICO credit score is calculated using several factors, including debt repayment history, outstanding debts, length of credit history and whether you have any new lines of credit open.
  • Debt-to-income ratio: Your debt-to-income ratio is a percentage that expresses how significant your required debt service payments will be in comparison to the money you bring For example, if you owe $30 and your income is $100, your debt-to-income ratio is 30%. Generally, lenders will look for a debt-to-income ratio in the mid to low 30s, though sometimes businesses with a debt-to-income ratio up to 43% can be approved for a loan.
  • Cash reserves: At a bare minimum, lenders want to see businesses maintain several months’ worth of expenses in cash reserves. Depending on the lender you are working with, they might expect three months of cash reserves to be kept on hand, while others prefer six months or more. Cash reserves assure the lender that even if unexpected expenses arise or a slowdown in sales occurs, your business can still cover loan repayments.
  • Collateral: Lenders will also consider the assets your business holds as collateral to back the loan in the event you don’t have money available to make your payments. Common assets used as collateral include equipment or machinery, land and other real estate.

As part of your loan application, you will likely have to provide several months’ worth of bank statements so lenders can understand your business’s cash flow. However, few elements are as important to a conventional lender as a business’s credit score and the personal credit score of the owner.

What is the credit spectrum?

Lenders look out upon the vast sea of potential borrowers and see a credit spectrum that ranges from very bad to very good. Depending on a business’s position in the credit spectrum, certain types of funding might be unavailable to them. Businesses with great credit can usually obtain long-term loans at low interest rates, but less creditworthy businesses might have to pursue more expensive and risky funding options.

“On the one hand of the credit spectrum is someone who can walk into a major bank and borrow money on the business’s credit, not a personal guarantee,” said James Cassel, co-founder and chairman of Cassel Salpeter & Co.

Those borrowers can expect low interest rates ranging from 2% to 5% on a term loan. Of course, Cassel added, that’s only true for “stellar businesses with great history.”

“On the other side of the rainbow are businesses that can’t get money from any kind of institutional lender,” Cassel said.

And just as there is a broad spectrum of credit scores for potential borrowers, there is a spectrum of financial products. Some, like bank loans or SBA 7(a) loans, are available to creditworthy borrowers, while businesses with decent credit might require a guaranteed loan.

What types of business loans can you get with bad credit?

What can businesses with bad credit do when they need funding? If their credit history isn’t good enough to obtain a loan from a conventional lender, businesses often turn to other types of financing, often provided by alternative lenders or private lenders. While the flexibility and speed with which these loans can be approved are useful to borrowers with bad credit, the terms can also be restrictive and the loans expensive.

“The further down you are in the credit funnel, the worse the rates are,” Cassel said. “With great credit, it could be 5%; with bad credit … it could bethe equivalent of 40%.”

Some of the most common loans available to businesses with mediocre or bad credit scores include:

  • Short-term loans: Short-term loans include both term loans that are repaid in three years or less, as well as lines of credit repaid within one year. Businesses with good credit will also leverage short-term loans because of their low cost and easy approval process. For businesses with credit issues, short-term loans can be useful because lenders often prioritize cash flow over credit score. So long as you have enough revenue and reserves to support a short-term loan, a lender will likely approve your application.
  • Hard money loans: Hard money loans include several different types of loans that are backed by a collateral asset rather than a credit score. Most often, the assets used as collateral are real estate, such as a building or plot of land. A bridge loan, for example, is a type of hard money loan that is often used when redeveloping a The loan is secured by the value of the real estate upon completion of the project, allowing the lender to foreclose on the property if the borrower defaults on the loan.
  • Invoice financing: Factoring,” or invoice financing, isn’t truly a Rather, a business owner essentially sells their accounts receivable to a factor at a reduced rate (typically ranging from 70% to 90% of the total value.) Once the outstanding invoices have been sold, a factor typically begins collecting the payments owed directly from your customers. Invoice factoring can be useful for seasonal businesses or when you need growth capital. However, using this option to cover operational expenses is a risky maneuver.
  • Merchant cash advance: A merchant cash advance is also not technically a Instead, it is a form of financing that is backed by credit card sales (or sometimes just revenue in general.) Based on your sales volume, a lender will offer a lump sum payment in exchange for a portion of every credit card sale until the loan (plus fees) is repaid. Merchant cash advances can be very expensive and are considered a financing option of last resort.

Before accepting any type of funding, do your homework. Research the lender thoroughly to ensure they are a reputable brand and not a predatory lender. Closely review any agreements before signing; have your attorney and accountant review them as well, if possible. Only accept money that you can realistically pay back in the specified time. Otherwise, financing could expedite the demise of a financially troubled business.

How to qualify for a short-term loan with bad credit

Short-term loans are a type of small business loan that closely resembles a conventional term loan in many ways. Short-term loans carry an interest rate and require repayment of both principal and interest within a certain period, just like a bank loan. However, because the term is less than a year, short-term lenders are more concerned with a business’s cash flow than its credit score.

“Banks ask for all types of collateral, and personal credit is very important to the bank,” said Michael Baynes, co-founder and CEO of Clarify Capital and a community member. “What’s important to us is cash flow [demonstrated] through six months of bank statements. If we feel [a business’s] bank balance can support our funding over the next four to 12 months, we’re comfortable lending to them regardless of personal credit score.”

Generally, Baynes said, alternative loans require a one-page application along with a minimum of three months of bank statements. That’s all an alternative lender needs to approve or deny a potential borrower’s loan application. But what exactly are alternative lenders looking for in a loan applicant?

“The most common reason we reject an application is due to a business being overleveraged,” Baynes said. “If they already have existing debt … and we feel additional payment would overleverage them, we would turn the business down.

“The other reason an application would be declined would be low revenue and low daily bank balances,” he added. “We need to see $10,000 to $15,000 per month in revenue or deposits. If they struggle with overdrafts or negative days in their bank account, we’re not confident they can make the payments.”

The approval process for these types of alternative loans tends to be much faster than conventional banks, which generally take weeks or months to approve or reject a loan application. If approved, funding for alternative loans can often be delivered within a few days at most.

To expedite approval, it’s important to maintain good financial documentation. According to Cassel, keeping detailed, accurate books is one of the most important things a business can do.

“Make sure your financial house is in order,” he said. “Every business needs to have monthly financials. They need to be available no later than 10 to 15 days after the end of month. Some businesses don’t get them until 90 days after the month. Then you’re 90 days further in the hole, and it’s too late to correct it.”

Good books not only help you avoid financial trouble, but they give lenders the insight they need to make a decision as to whether or not to extend financing to your business.

How can you begin repairing bad credit?

There are advantages to repairing a damaged credit score even if you do qualify for funding. According to Baynes, an improved credit score can avail your business to better terms and rates. While rebuilding credit can be a long and arduous process, you should do so if your financial situation has stabilized.

“Obviously, first and foremost is staying current on your personal credit payments,” Baynes said. “These are things like auto loans and credit cards. Maxed out credit cards drive down your credit score. Missing payments or just making minimum payments brings down your credit score tremendously.”

According to Cassel, business credit rehabilitation can be extremely difficult and requires a detailed plan. While maintaining your personal credit score, you also need to keep an eye on your business’s debt service.

“When businesses get into trouble, they should put together a 13-week cash flow [projection] of expected funds in and expected funds out,” he said. “This helps them manage cash and decide what to pay for.”

There are some ways a business can seek relief to help stabilize their financial situation as well, such as raising prices. Many small business owners are reluctant to raise prices, Cassel said, because they are afraid of losing customers. In many cases though, there is more room to hike rates than entrepreneurs realize.

Businesses can also ask suppliers to extend payment schedules. If you are a good customer who has remained current in the past, a vendor is likely to work with you; after all, they don’t want to lose you as a customer.

If you’ve partnered with a lender before, they might be willing to lend a bit more to your business if they see you are legitimately on the road to financial rehabilitation. This is known as an “airball,” Cassel said. If things become truly dire, a business can usually call in a restructuring firm to reorganize how the business operates.

“Sometimes it is a vicious cycle that is impossible to get out of,” Cassel added. “As things get worse, the cost of borrowing goes up, so you have to figure out how to stabilize the business. Once you stabilize, you can focus on repair.”

Unfortunately, when financial troubles become pervasive enough, there are times where business owners have to reckon with a hard truth many entrepreneurs find difficult to face. The best option, Cassel said, is sometimes to cut your losses and stop the bleeding.

“You’ve got to look at the viability of the business,” he said. “Business owners have to be honest with themselves about long-term viability.”

Ultimately, securing financing should be a way to get your business to a better place in the credit spectrum. That way, the next time you need funding, you can successfully pursue a financial product with better rates and more favorable terms. If financing doesn’t support that type of forward progress, then it could just be digging your business into a deeper hole. For struggling businesses, Cassel had this advice:

“Be honest, try to get a loan and, ultimately, get back to a better lender,” he said. “Some businesses never do, and owners start to feel like they’re working for the bank.”

Financing can be a great tool in an entrepreneur’s toolbox, but taken irresponsibly or out of desperation, expensive loans can be the death knell for a cash-strapped business. Always have a plan for any money you borrow and keep an open line of communication with your lenders. If you do, you could be well on the road to repairing your credit.

Click here to read the PDF.

Broward wealth advisory company forms private equity division

By Ashley Portero
Feb 21, 2020

BlueKey Wealth Advisors now has a private equity division.

The Hollywood-based firm this week formed BlueKey Equity Partners, which will focus on private lending, real estate and business investments in small and mid-capital growth companies.

“We assist in providing capital, innovative solutions and strategic expertise to our portfolio throughout the investment cycle,” Amaury Cifuentes, one of the firm’s founders, said in a statement. “The extensive experience of our professional team allows us to implement a rigorous process to identify ‘best in class’ opportunities in our focus areas.”

In addition to Cifuentes, the firm’s partners include Kenneth C. Brown, formerly managing director and partner at One Equity Partners, the private equity division of JPMorgan Chase; Henry Buzgon, VP of Eastern Quality Foods; Felix E. DeHerrera, co-founder of the Southwest Alliance of Asset Managers and Alterra Home Loans; Manny Fadraga, previously VP at Charles Schwab; and Michael H. Muehlenfeld, former president of United Mile Fleet, a vehicle supplier for rental car companies.

Cifuentes is also managing partner of BlueKey Wealth Advisors.

South Florida leads the Sunshine State in private equity firms and private equity-backed deals, according to a June analysis from Cassel Salpeter & Co.

The region accounted for 39.7% of the state’s private equity deals in the first half of 2019.

Click here to read the PDF.

American Express Logo

What’s Your 2020 Business Resolution?

By Julie Bawden-Davis
February 18, 2020

These 19 entrepreneurs share their business resolutions and goals for the coming year.

Now that 2020 has just gotten started, you’ve most likely set some business resolutions for the coming year.

“Business owners are often pulled in a lot of directions, but that doesn’t mean we have to lose sight of our goals,” says Mac Fadra, CEO of MAXiM Hair Restoration. “While not contractual or binding, business resolutions are a great way to set goals for your company.”

When you’re making plans for your company, it can help to hear about the plans other business owners are making. I asked 18 people to share what their top business resolutions for 2020 are, and here’s what they had to say.

Focus on Giving Back

“My business has grown from just me to 10 full-time employees and 20 instructors. This year, among my business resolutions is to significantly increasing philanthropic contributions, community outreach and financial rewards to employees. I think that business owners sometimes forget how impactful we are to the lives of our customers, employees and their families, and the community.”

Shaan Patel, founder, Prep Expert

“As an agency, we have always taken great pride in supporting causes that benefit our greater community. From 10 pro-bono events we produce each year, to the days allotted to employees for out-of-office community service, we will continue to support giving back to causes in 2020 by allotting dedicated staff hours to social good.”

Build Brand Awareness

“I intend to focus on building brand awareness for my business resolutions. This will ultimately help boost sales and make my products grow in popularity with consumers. To make my resolutions a reality, we will continue to create opportunities to educate consumers on the benefits of our product, compared to others on the market.”

Nakia Hall, founder and inventor, BouncyBoo

I plan to focus on satisfying repeat patients who see us regularly and refer us to their family and friends. While I’m always happy to treat new patients, I do value and tend to make a priority the longevity of recurring patients.

Ziad Jalbout, founder, Making You Smile Cosmetic Dental Studio

“In terms of business resolutions, I plan to raise brand awareness and increase the number of people who know about us, try our products and trust us to supply their needs.”

Vinay Amin, health expert and CEO, Eu Natural

Boost Digital IQ and Exposure

“We recognize that most consumers these days will leverage technology in multiple ways to find businesses online. Boosting our digital IQ in 2020 will help us further our potential in generating new customers through our digital marketing efforts. This will include refining our understanding of our website’s content management system so we can make updates for SEO value and create and share videos.”

Bryan and Patty Sibbach, owners, Precision Training Concepts

“I plan to take advantage of the growth in streaming, as well an increasingly connected world, by continuing to expand our presence internationally in the streaming media intelligence category.”

Bill Demas, CEO, Conviva

Increase and Enhance Productivity

“In terms of business resolutions, I want 2020 to be a year where I am more productive and not just busy. This means keeping an eye on trends and events that may affect my future business. This also means developing win-win relationships with other companies and individuals, which is important to sustain our company and build a pipeline for the future.”

James Cassel, chairman and co-founder, Cassel Salpeter & Co.

“We aim to ensure greater coordination between our team members and accordingly use new processes and tools to increase productivity. This is important, because when used properly, these tools help keep the entire team in the loop, enforce deadlines and ensure smooth delivery.”

Avinash Chandra, founder and CEO, BrandLoom

Consult With Employees on Business Resolutions

“In business, a resolution made by company leaders will rarely guarantee performance. I plan on involving employees, who are the ones that make the goals happen. Involving as many people as possible in setting goals ensures we’re headed toward the same goals. It’s easy to stop one guy…pretty hard to stop a hundred.”

Steve Baker, vice-president, The Great Game of Business

“I plan to have lunch once a week with different members of my team. There are few better ways to bond with employees and learn more about them than over a meal. I can learn a great deal from everyone’s unique experiences and perspectives.”

Abhi Lokesh, CEO and co-founder, Fracture

Invest in Culture

“In a short time, we’ve more than doubled our employees, moving from a close-knit team of mavericks to a much bigger team. It’s been an interesting education in observing how fragile culture is and how it develops as companies grow. My business resolutions for 2020 are to delegate some of the cultural nurturing to members in the team with an interest in safeguarding what we’ve built, as well as developing new channels for input, feedback and collaboration, as we continue to expand.”

Nana Wereko-Brobby, head of communications, HomeHero

“We plan on keeping our work culture involved and fun. For 2020, this will include weekly team roundtables to discuss client accounts and team outings.

We’ll also be implementing team volunteer days to contribute to our team’s sense of social impact.”

Alicia Piazza, president, The Spark Social

Prioritize Customer Service

“I plan to focus on satisfying repeat patients who see us regularly and refer us to their family and friends. While I’m always happy to treat new patients, I do value and tend to make a priority the longevity of recurring patients.”

Ziad Jalbout, founder, Making You Smile Cosmetic Dental Studio

“My New Year’s business resolutions will focus on spending more time with our clients. Like most CEOs, at the start of the journey, I took personal responsibility for revenue generation and getting new clients. Over time, as other responsibilities grew, I became less client facing. Getting out and seeing clients is invaluable and really sparks ideas and innovation. It’ll be a challenge to balance the time I spend in the office with my team and out meeting clients, but I’m excited about the prospect.”

Mark Allwood, CEO, GlobalX

“I plan to engage more with my clients. In 2020, we want to continue our workshop demos on Saturdays so people can continue to learn the process of jewelry making. By doing so, clients can understand exactly where the prices we are charging them are coming from and genuinely feel that what they’re buying is curated just for them.”

Samuel Tang, designer and owner, Joy Creations

Focus on Strategic Thinking

“Improving initiatives through better strategic thinking allows us to challenge everything we do and how and why we do it. We plan to ask, is this really making our company better and using resources, such as time, wisely?”

Steve Willis, managing director, milliCare Floor & Textile Care

“In the past, I have started programs and pulled them too quickly. Moving forward, I’m making business resolutions to plan more of the long game. Everything doesn’t need to be done today. With more of a long game focus, there can be greater success.”

Kristin George, digital PR manager, Ignite Visibility

“For 2020, my business resolutions are all based around innovation and being disruptive, so we always have new ideas. We’ll schedule more brainstorming sessions, and ideas will be rewarded with incentives. This way, we can offer our customers exciting new features and keep at least two steps ahead of the competition.”

Andrea Loubier, CEO, Mailbird

Click here to read the PDF.

Is doing well doing good?

By James S. Cassel

Last summer, the Business Roundtable (BRT), a nonprofit association of major U.S CEOs, redefined the meaning of a company’s The new gold standard, or maybe better stated, the new golden rule, now includes corporations working to not just increase monetary value and make more profits for its shareholders, but also to benefit the environment, the community, their employees, customers, and suppliers.

Increasingly, companies are not only focusing on profit-making (essential and nothing to apologize for) but also on doing what’s good for stakeholders and society at large. In doing so, they are providing the answer to an important question: Can doing well also mean doing good?

A lot of businesses these days believe that they go hand-in-hand, or at least they should, because a better future for all is tied to asking the question. Those who don’t bother to redefine doing well as also doing good may be left behind or suffer injury to their brand.

A recent Bloomberg article showed how hedge funds and mutual funds face increasing pressure from investors to address Environmental, Social, and Governance (ESG) criteria that weigh the sustainability and societal impact of investments. These demands make funds push companies they invest in, to either do good for the community and the environment or suffer investor capital flight. For example, BlackRock Inc., the world’s largest asset manager, recently prioritized climate concerns in its investment strategy, putting the competition on notice, as well as the companies in which it invests.

Consumers are also increasingly rewarding companies that do good while punishing those they think do bad. Little surprise that companies like McDonald’s and Starbucks have become more energy-efficient reducing their negative environmental impacts, while companies like Dell have implemented recycling programs to reuse and dispose of electronic products more safely.

These businesses are wise to publicize their efforts, often letting consumers know they care about the communities using their products and services, while making doing good part of their brand, a business lesson all should embrace.

So, here are some things your middle-market company can do to do good and not just well:

  • Identify changes that won’t break the bank but help the environment. Plastic straws may not be illegal yet, but why not change to paper or sugar straws now if those are used at your business? While you’re at it, create a company recycling program if you don’t already have Some cruise lines, for example, have moved from plastic to other products, reducing waste and making recycling easier. Your business can also change to LED lighting and cut heat and energy usage, while opting for sustainable materials for any office renovations.
  • Consider hiring individuals in the community who come from economically distressed areas or might have criminal records. Giving people new opportunities for success, or second chances can help you do well and do good. Take for example Nehemiah Manufacturing of Cincinnati, which effectively hires workers with criminal records, a great way to give a break and get great and loyal employees, while also addressing a tightening labor market.
  • Source products locally whenever possible. Supporting local entrepreneurs can actually mean fresher food products, a smaller carbon footprint since you’re using less trucking or air shipping, and a reinvestment into your own You can also favor suppliers who do good, not just well, and build a support network of do-gooders like yourself.

When middle-market businesses do good, they help employees feel better about their work, boosting productivity and creating loyalty to your business. Creating pro-environment, pro-community efficiencies and supporting a culture of responsibility are powerful motivators that ripple across not only your business, but across the very community you live in, and it is good for the bottom line, too. Allow your company a social conscience and do good and see how quickly your business starts doing very well, too. Our nation’s and world’s sustainability might depend on it.

James S. Cassel is co-founder and chairman of Cassel Salpeter & Co., LLC, an investment-banking firm with headquarters in Miami that works with middle- market companies. He may be reached via email at or via LinkedIn at

Click here to read the PDF.

What Are Merchant Cash Advances and Working Capital Loans?

By Adam Uzialko

Could a merchant cash advance or working capital loan be the answer for your cash flow problems, or a potential pitfall?

  • Merchant cash advances offer an immediate lump-sum payment in exchange for future credit card sales.
  • Working capital loans offer a variety of financing options for short-term funding to cover operational costs.
  • There are risks associated with each type of financing that should be avoided.
  • Strategic planning for repayment can make each type of financing a viable option for many businesses.

Many small business owners have experienced a time when they need more cash on hand. Cash flow management is everything in business, but sometimes even the savviest small business owners find themselves with money tied up and unable to cover operational expenses. In these times, there are a variety of financing options available to small business owners that can help tide them over with liquid capital delivered directly to their bank accounts.

However, these financial products come with their own set of risks that must be properly managed to avert disaster.

When handled properly, these tools can keep a cash-hungry business running. When misused, they could lead to a vicious cycle of debt. This guide will introduce you to funding tools like merchant cash advances and working capital loans and provide advice from financial experts on how to use them to your benefit. Good planning and financial record-keeping is key to repaying loans successfully and keeping your business profitable.

What is a merchant cash advance?

A merchant cash advance is a form of financing that isn’t truly a loan. Instead, it is a financing option that provides immediate cash in exchange for a business’s future credit card sales receipts. In essence, when a business accepts a merchant cash advance, they are selling the revenue of future credit card sales for immediate payment.

Merchant cash advances are often used by seasonal businesses or those with cyclical sales to keep cash flow circulating during slow times of the year.

Business owners can pay operating expenses and wages when sales are slow; then, when sales volume picks up, the business can repay the merchant cash advance and generate a profit. Since merchant cash advances are backed by projected sales, businesses with a less-than-perfect credit score also often rely on them for an injection of short-term working capital.

Besides operating expenses and wages, businesses use merchant cash advances for things like equipment financing, marketing campaigns, hiring new employees, expanding inventory, buying needed materials and acquiring property.

How do merchant cash advances work?

A merchant cash advance traditionally offers an influx of capital based on a business’s expected credit card transactions over the course of a specified term. For example, if a business receives a $100,000 merchant cash advance with a 52-week term and a factor rate of 1.25, the business would have to pay back $125,000 in credit card sales over the course of the next year.

Merchant cash advance repayment is generally broken down into weekly payments, said Randall Richards, the director of business development at RFR Capital. According to Richards, cash advance companies will often draw the payment directly from a business’s bank account rather than its merchant account associated with credit card transactions.

“Weekly payments would be based on sales and a multitude of factors,” Richards said. “Someone who is only doing $20,000 per month in sales won’t qualify for a $100,000 [advance.] The sales have to support the payment or else the lender is at risk of losing money.”

Since merchant cash advances are based on sales, borrowers with poor credit can usually access them even when they can’t obtain a traditional loan. Of course, this flexibility means that merchant cash advances are more expensive than bank loans as well.

“[Merchant cash advances] are one of the alternatives today for people as they move down and become less and less creditworthy,” said James Cassel, co- founder and chairman of Cassel Salpeter and Co. “Merchant cash advances could [carry] the equivalent of 40% interest rates.”

Cassel clarified that merchant cash advances don’t carry an interest rate of their own, but the cost of a cash advance can be measured against the interest rates associated with a traditional loan. For example, in Richards’ hypothetical of a $100,000 merchant cash advance that costs a business a total of $125,000 over a 52-week term, the interest rate equivalent would be 25%. That is much higher than the interest rates on many bank loans, which might cost a business with great credit between 2% and 5% of the loan’s principal value, Cassel said. Understanding your factor rate and whether you can negotiate it is useful in reducing the cost of a merchant cash advance.

What are the pros and cons of a merchant cash advance?

Merchant cash advances can be useful tools for many businesses. Whether you are a seasonal business weathering the slow season or a business with cyclical sales, such as a manufacturer that makes most of its sales in Q4, merchant cash advances offer support. However, for struggling businesses, relying on a merchant cash advance to stay afloat could be the beginning of a death spiral.

“Sometimes it’s a business that’s so excited and thinks it can’t lose but does. Other times, it’s a business that’s in deep trouble and just trying to stay afloat, waiting for the one more sale … just trying to survive, because then they believe they will thrive,” Cassel said. “Sometimes you have to question the viability of the business.”

Like all forms of financing, merchant cash advances come with a unique set of pros and cons. If you plan accordingly, they could be an effective tool for maintaining healthy cash flow and operating your business profitably.

However, they can also expedite the demise of a failing business when used improperly. Managing a merchant cash advance to the benefit of your business means understanding the pros and cons and how to best navigate them.


  • Immediate lump-sum payment: Merchant cash advances are useful because they deliver a lump sum payment to a business immediately. That means when cash flow is low, a business can bolster it with a quick influx of capital.
  • Based on sales, not credit score: Merchant cash advances are based on sales instead of credit score, meaning even borrowers with poor credit or no credit can make use of them.
  • Easy to qualify: Qualifying for a merchant cash advance is relatively easy. It requires a few months of bank statements, a one-page application and some basic information about the business, such as its tax identification number, website and address.
  • Fast approval process: Merchant cash advances can generally be approved more quickly than bank loans, which often take several months for In some cases, merchant cash advances deliver funding within a few days of approval.


  • Expensive: Merchant cash advances are generally very expensive, ranging from a high 40% equivalent rate to an astronomical 350% equivalent rate in extreme The cost depends on several factors, including the lender a business partners with, but a merchant cash advance is always significantly more expensive than a traditional loan.
  • One-time influx of capital: Merchant cash advances offer a one-time injection of a modest amount of For many businesses, this isn’t a problem. For example, the seasonal business that needs to cover its operational costs in the lean months until business booms again will likely do well with a merchant cash advance. A struggling business using a merchant cash advance to hold itself over in hopes that sales eventually increase, however, could be backing itself into a corner.
  • Restrictive requirements: To accept a merchant cash advance, a business must sign an agreement with a In many cases, these agreements include provisions that require the business to abide by certain rules. For example, your business might be precluded from moving locations or taking out an additional business loan. Cassel said you can avoid this problem by having an attorney review any agreements before you sign and negotiating the details of the contract.

What is a working capital loan?

The term “working capital loan” refers to a small business loan or alternative financing option designed to cover near-term costs with a short repayment date. Working capital loans are often used by businesses to cover a wide range of operational costs. There are many different types of financing that could be considered a working capital loan, including:

  • Lines of credit: A line of credit isn’t a loan but rather a predetermined amount of money a business could borrow from at any Much like a credit card, lines of credit only incur interest on the balance borrowed, not the total value of the credit limit. Lines of credit are primarily extended by banks or credit unions, though sometimes businesses with enough leverage can negotiate a line of credit directly with their supplier. The amount of a line of credit is generally based on a business’s credit score.
  • Short-term loan: A short-term loan is generally a small dollar loan to be repaid in one Short-term loans range up to $100,000, providing borrowers with an injection of capital to cover operational expenses immediately. Interest rates on short-term loans can vary but tend to be higher than longer-term conventional loans due to their quick maturity period.
  • Invoice factoring: Invoice factoring, also known as accounts receivable financing, is similar to a merchant cash advance as it is not related to credit but instead a business’s sales. A business sells a lender (or “factor”) their uncollected accounts receivable for a significant portion of the total value upfront. The factor then works to collect the outstanding payments and keeps the remaining percentage of the total value not paid to the Invoice factoring is generally considered less risky than a merchant cash advance for one simple reason: Invoice factoring is based on existing accounts receivable that have not yet been collected, while merchant cash advances are based on projected future sales rather than an existing asset.
  • Equipment loan: Equipment loans are specifically intended for the acquisition or lease of equipment needed for a business to operate. Generally, these loans are backed by the equipment itself as collateral rather than a business’s credit; if the business fails to repay the loan, the equipment can be repossessed.

Borrowers that require a working capital loan might need them for the same reasons a company seeks out a merchant cash advance, including covering wages, financing the purchase of equipment, acquiring new properties and expanding inventory. They are also commonly used by seasonal businesses or those with cyclical sales.

What are the pros and cons of a working capital loan?

Working capital loans tend to be less risky than merchant cash advances but often serve similar purposes. However, it’s not uncommon for the qualifying requirements to be stricter, since working capital loans are often based on creditworthiness or some other form of collateral more tangible than projected future sales. Here’s a closer look at some of the pros and cons associated with working capital loans.


  • Short repayment period: Working capital loans, by nature, have fast repayment periods, which are useful to businesses that want to quickly clear the debt from their Repaying a loan within one year means businesses aren’t forced to pay interest on the loan for years to come.
  • Flexible: Depending on the type of working capital loan, funding is relatively Certain loans, like equipment financing, are more restricted; however, lines of credit, short-term loans and invoice factoring can all be used to cover a wide range of costs.
  • Fast approval process: Short-term loans generally have a faster approval process than conventional loans because they are designed to fill an immediate need for a


  • Expensive: A short-term loan matures more quickly than traditional loans, so borrowers should expect to pay higher interest rates. The interest rate on most working capital loans varies depending on the precise type of loan, but they are generally more expensive than a longer-term loan.
  • Short repayment period: While the short repayment period is a blessing to companies that want to clear debt from their books, it can be a challenge for businesses that struggle to repay their Since working capital loans have a much narrower window than longer-term conventional loans, businesses have to pay back the principal much more quickly.

If you need cash fast, consider a merchant cash advance or working capital loan

Many businesses need help to support their cash flow. After all, cash flow is oxygen to a business, and without oxygen, it won’t be long before the business chokes and operations stall. Merchant cash advances, lines of credit and working capital loans are methods that can help buoy businesses while they await future sales. However, without a clear plan in place, these forms of financing can spell disaster for a business.

To make the most of any type of financing, have a clear road map to repayment and the ability to execute that plan successfully. Good record- keeping and a strong understanding of your business are critical.

Accepting a loan in hopes that you might generate future sales to cover it is a major risk. When in doubt, consult with an accounting professional before accepting any money from a lender of any kind. With a bit of planning, though, merchant cash advances and working capital loans could be precisely the support you need to get through the lean times until you’re back on track to profitability.

Click here to read the PDF.

Cassel Salpeter Welcomes New Managing Directors Margery Fischbein And Deborah F. Aghib, Ph. D., Expanding Its Healthcare Group

February 10, 2020

​​​​​​​Driven by strong sustained growth and an unwavering commitment to providing top-tier independent investment banking services for middle-market and emerging growth companies, Cassel Salpeter & Co. announced the strategic additions of Margery Fischbein and Deborah F. Aghib, Ph.D. Two exceptional professionals with over 65 combined years of executive experience, Ms. Fishbein and Dr. Aghib will join Ira Leiderman and the team as managing directors of the healthcare group, one of a broad spectrum of industries the firm assists, and an increasingly in-demand vertical for the company.

In these roles, Ms. Fishbein and Dr. Aghib will advise owners and boards of directors of middle-market, private and public companies on a variety of M&A transactions, equity and debt financings, strategic licensing and partnering, and financial advisory assignments across a range of healthcare verticals.
“As part of our firm’s accelerated forward momentum, we warmly welcome these seasoned industry experts, who join our longtime healthcare managing director, Ira Leiderman,” said chairman and co-founder James Cassel. “Their experience, track record, and client-first approach is perfectly in line with our commitment to providing world-class services. Together with Ira, they will spearhead dynamic new initiatives and help satisfy significant demand for our healthcare services.”


Prior to joining Cassel Salpeter, Ms. Fishbein was head of Healthcare Investment Banking for Seaport Global and FBR & Co., and head of East Coast Biotechnology Investment Banking for JMP Securities. Ms. Fischbein also held senior executive positions at the biotechnology companies ImClone Systems and Human Genome Sciences. She began her career rising to senior vice president at Lehman Brothers and then as managing director of investment banking at JPMorgan Chase and Citigroup.

Ms. Fishbein earned a master’s in business administration from Harvard Business School and a bachelor’s degree from Harvard University.


Prior to joining Cassel Salpeter, Dr. Aghib was a private equity consultant for CRG LP, a global healthcare-focused investment firm and industry pioneer. Before that, she was the chief business development executive for Stellar Biotechnologies, Inc., and also held other senior executive positions. Dr. Aghib was also an Independent Director on the Stellar Biotechnologies, Inc. board of directors. She is currently a board member of the OpenWorm Foundation.

Dr. Aghib holds a Ph.D. in Molecular and Cellular Biology from the University of Milan (Italy) and a Ph.D. in Human Genetics from the University of Pavia (Italy), and a M.Sc degree in Biological Sciences from the University of Milan (Italy).

About Cassel Salpeter & Co.
Cassel Salpeter & Co. LLC is an independent investment banking firm that provides advice to middle market and emerging growth companies in the U.S. and worldwide. Together, the firm’s professionals have extensive experience providing private and public companies with a broad spectrum of investment banking and financial advisory services, including: mergers and acquisitions; equity and debt capital raises; fairness and solvency opinions; valuations; and restructurings, such as 363 sales and plans of reorganization. Co-founded by James Cassel and Scott Salpeter, the firm provides objective, unbiased, results-focused services that clients need to achieve their goals. Personally involved at every stage of all engagements, the firm’s senior professionals have forged relationships and completed hundreds of transactions and assignments nationwide. The firm’s headquarters are in Miami. Member FINRA and SIPC.

Aviation Deal Report Q4 2019