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Many small businesses in the U.S. are not able to obtain the financing they need to grow their operations. Sometimes it is because they do not have a good credit score, consistent cash flow or collateral. Sometimes it is simply because they are startups. This is particularly true for women entrepreneurs who are often reluctant to apply for loans, ask for less financing and approved less often.

There are alternative financing options that are expensive but may help small business owners meet their emergency need for cash. These are merchant cash advance (MCA) and Automated Clearing House (ACH) advance. According to 6th Avenue Capital CEO Christine Chang, MCA gives borrowers an upfront sum in exchange for a portion of future sales while ACH uses borrowers’ cash flow statements and bank accounts to determine funding and repayment. Both MCA and ACH can be approved in 24 to 48 hours.

Chang added that MCA and ACH are expensive and have been associated with unsecured financing and predatory lending. But she said that 6th Avenue Capital has a transparency policy and conduct a lot of self-regulation. The firm is a member of the Small Business Financial Association and the Independent Lending Platform Association.

There are different situations where MCA and ACH may be able to fill the funding gap. These include during government shutdown when the Small Business Administration has stopped releasing loans, emergency to need to buy any equipment or supplies to meet big orders or contracts and after a natural disaster.

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