Equipment Financing (Capital Lease):

Advantages:

1. Preserves Cash Flow: By spreading the cost of equipment over time, capital leases help preserve cash flow for other business expenses.
2. Ownership: At the end of the lease term, the lessee typically has the option to purchase the equipment at a predetermined price.
3. Tax Benefits: Lease payments may be tax-deductible as operating expenses, providing potential tax benefits to the business.

Disadvantages:

1. Ownership Costs: While the lessee may eventually own the equipment, they are responsible for maintenance, insurance, and other ownership costs during the lease term.
2. Long-Term Commitment: Capital leases often involve long-term commitments, which may not be ideal for businesses with uncertain future needs.
3. Depreciation: Since the lessee assumes ownership risks, they may be subject to the equipment’s depreciation value over time.

Merchant Cash Advance:

Advantages:

1. Quick Access to Funds: Merchant Cash Advances offer rapid access to capital, often with minimal paperwork and approval requirements.
2. Flexible Repayment: Repayment is based on a percentage of future credit card sales, allowing for flexibility during slow business periods.
3. No Collateral Required: Merchant cash advances are typically unsecured, meaning borrowers don’t need to provide collateral to secure funding.

Disadvantages:

1. High Cost: Merchant cash advances often come with high fees and interest rates, making them an expensive form of financing.
2. Revenue Dependency: Repayment is tied to future credit card sales, which can put pressure on cash flow during periods of low revenue.
3. Potential Debt Cycle: The high cost of merchant cash advances can lead to a cycle of debt if businesses rely too heavily on this form of financing.

FMV (Operating Lease):

Advantages:

1. Lower Payments: Operating leases often feature lower monthly payments compared to capital leases since they cover only the equipment’s use, not ownership.
2. Flexibility: At the end of the lease term, lessees have the option to return the equipment, renew the lease, or purchase the equipment at Fair Market Value.
3. Off-Balance Sheet Financing: Operating leases may allow businesses to keep leased assets off their balance sheet, potentially improving financial ratios.

Disadvantages:

1. No Ownership: Unlike capital leases, operating leases do not provide the option for the lessee to own the equipment at the end of the Lease Term.
2. Total Cost: While monthly payments may be lower, the total cost of leasing equipment through an operating lease may be higher over time compared to purchasing outright.
3. Restrictions: Operating leases may come with usage restrictions or penalties for excessive wear and tear on the equipment.

Factoring:

Advantages:

1. Immediate Cash Flow: Invoice Factoring provides immediate cash flow by selling accounts receivable to a third-party (factor) at a discount.
2. No Debt: Factoring is not a loan, so it does not add debt to the business’s balance sheet.
3. Outsourced Collections: Factors typically handle collections on behalf of the business, saving time and resources.

Disadvantages:

1. Cost: Factoring fees can be higher than traditional loan interest rates, reducing the amount of funds received from accounts receivable.
2. Customer Perception: Customers may view factoring as a sign of financial distress, potentially damaging relationships.
3. Dependency: Factoring may create dependency on external financing, limiting long-term financial independence.

Here are some dispels for people who are hesitant to work with a loan broker:

1. “I don’t want to pay extra fees.”
– Dispels: While some brokers may charge fees for their services, many brokers, like Liberty Capital Group, operate on a commission basis from the lenders, meaning there’s often no direct cost to the borrower. Additionally, brokers may help you find loans with better terms and rates, potentially saving you money in the long run.

2. “I can find loans on my own.”
– Dispels: While it’s possible to find loans independently, brokers have access to a wide network of lenders and can often negotiate better terms on your behalf. They can also save you time by handling paperwork, comparing offers, and guiding you through the application process.

3. “I don’t want to share my financial information with a third party.”
– Dispels: Reputable brokers prioritize client confidentiality and only share necessary information with lenders for the purpose of securing loans. They have strict privacy policies in place to protect your sensitive financial data.

4. “Brokers might pressure me into loans I don’t need.”
– Dispels: A trustworthy broker, such as Liberty Capital Group, will prioritize your needs and goals, providing impartial advice and helping you find the best loan options for your situation. They won’t push you into loans that aren’t suitable for your business.

5. “I prefer dealing directly with lenders.”
– Dispels: While it’s possible to work directly with lenders, brokers offer several advantages, including access to a wider range of loan products, expertise in navigating the lending landscape, and personalized assistance throughout the loan process.

6. “Brokers might not have my best interests at heart.”
– Dispels: Reputable brokers, like Liberty Capital Group, are licensed professionals bound by ethical standards and regulations. They have a vested interest in helping you secure the right loan for your needs, as their reputation and success depend on client satisfaction and referrals.

Working with a loan broker can often streamline the borrowing process, provide access to a broader range of loan options, and offer personalized guidance and support tailored to your specific financial needs and goals.

Short-Term Business Loans:

Advantages:

1. Quick Funding: Short Term Loans offer rapid access to capital, making them ideal for emergency expenses or time-sensitive opportunities.
2. Flexible Repayment: Many short-term loans offer flexible repayment terms, allowing businesses to tailor payments to their cash flow.
3. No Collateral Required: Some short-term loans are unsecured, meaning borrowers don’t need to provide collateral to secure funding.

Disadvantages:

1. High Interest Rates: Short-term loans often come with higher interest rates compared to traditional bank loans, increasing the overall cost of borrowing.
2. Short Repayment Period: While the term “short-term” implies quick repayment, the Short Repayment Period can put pressure on cash flow, especially for businesses with irregular income.
3. Limited Loan Amounts: Short-term loans typically offer smaller loan amounts compared to long-term financing options, which may not meet all of a business’s funding needs.

Factoring is the other form of alternative financing. Factoring uses your future invoices. You can leverage your future cash-flow. You are able to access your capital today for a discount rate.

Now, the newest is merchant cash advance. Merchant cash advance is similar to factoring but in addition to future invoices, credit card sales are also used for a discount rate as well. Both are advance of your future revenue. To qualify for these two factoring products, you must have future income to be able to repay.

Majority of your advice will come from family members, CPAs, Attorneys and consultants; however, most of them have no clue on what and how it takes to get approved.

Not only that the process is time prohibitive, it also requires big down payment, collateral and involve providing unborn children future income to secure any form of Guaranteed type of loans.

Do you have a business plan, projections and cash flow readily available? Most businesses don’t have business plans let alone projections. Only about 10% of businesses run on a business plan.

Closest to a Grant is an SBA but both are hard to get. There is no such thing as Free money.  Don’t forget SBA only guarantee 50-85% on most guaranteed loans so banks still have the risk, without your skin in the game banks will not be willing to provide cheap loans.

The following adverse situation may disqualify your quickly from a more traditional banks and lender, however, with Liberty Capital, that’s where the Loan Broker comes handy.

If any of the following apply to you, you may find your options limited:

– Previous or current bankruptcy filings
– Outstanding tax liens, whether paid or unpaid
– Unfiled federal taxes spanning over three years
– Open or unsettled legal judgments
– History of foreclosures or vehicle repossessions
– Maxed-out credit cards or persistent missed payments
– Frequent occurrences of negative account balances (NSF’s)
– Felony convictions or criminal backgrounds
– Multiple “LOAN STACKING”
– Unverifiable Business and Personal Profile
– Delinquent child support
– Prior defaults on loans, SBA funding, leases, or cash advances
– Personal and Business bankruptcies within the last seven years

It’s essential to be cautious when dealing with Credit reporting agencies like Dun & Bradstreet, especially if you’re a startup. Remember, Dun & Bradstreet relies heavily on self-reported data. For Startups, personal credit history often carries more weight, as establishing business credit with Dun & Bradstreet in exchange for poor personal credit isn’t feasible. While collateral or down payments may improve your chances, there’s no Guarantee of approval, particularly if your credit history is unfavorable.

First advice is don’t borrow!

Second advice have all your docs in a row to get the lowest possible rates. Interest is a cost of doing business. It’s risk reward for both you and the lender. Most business owners only think about themselves but forget to think about the guy who’s taking the risk. The risk that you could be out of business any day and stop paying any loans. Economic down turn will cause stop payments.

There is no such thing as cheap money if you have bad credit and no collateral. If you want the lowest rate give up your equity.