Being not bankable is not the end of the world. There are still plenty of opportunities to gain access to working capital when you need it. In this continuing series of what to do if your small business or start-up is not bankable, The Commercial Finance Group, a long standing working capital financing company, will take a look at more ways to gain access to cash when you need it the most. Contact us today to get started!



A sale-leaseback is generally suitable for capital intensive companies. Under a sale-lease back, you can use it for either buying new equipment or as a way to monetize existing equipment. In the case of monetizing existing equipment, the company sells its equipment to a leasing company and then immediately leases it back from them. The small business now has a good chunk of cash in its pocket in order to fund its immediate cash flow needs. In exchange for cash, the company transferred ownership to leasing company who in turn leases it back to the company. The company or start-up now has a lease payment (or rental payment as they call it) that it didn’t have before. Many manufacturing and distribution companies will use this method of financing, as will many, transportation and logistics companies. The lease term can vary based on the useful life of the equipment but is usually for at least 5 years.  The cost depends on the credit quality of the lessee, the type of equipment involved, whether the equipment is new or used the length of the lease, and the amount of the lease.  One drawback to this type of financing is that now the small business cannot depreciate the equipment on its books or taxes, but from a tax standpoint the lease payment is fully tax deductible. Usually at the end of the lease term, you can either buy the equipment at an agreed upon price, or give it back to the leasing company similar to what happens when you lease a car.


Merchant cash advances are where a B2C business or start up receives a lump sum based on their past monthly deposits (usually between 60% and 80% of your past six months deposits) and the lender debits your checking account daily, weekly or monthly at a set amount until the loan and the fees are paid back.  Repayment terms vary between six and 12 months, thus if your cash flows are volatile or inconsistent, MCAs are probably not a good fit.  MCA loans/advances are considered by most in the small business loan industry as loans of last resort because of their high cost (can be in excess of 100% APR), and strict repayment plans. This type of financing is mainly used by small B2C (retail, restaurants) companies and start-ups because they have no accounts receivable to use as collateral. B2B companies should be very wary of using MCAs as they can disrupt your collections from your customers, and if you are seeking accounts receivable financing or have an existing working capital line, procuring these funds can put you in violation of your current financing.  If you are investigating a merchant cash advance for your short-term business loan needs, make sure you read the fine print and exhaust all of your other small business loan options first and talk to your CPA before proceeding, or give The Commercial Finance Group a call, we can help guide you.




Non-bank loans are another option for small businesses who can’t meet banks’ lending conditions. Offered by specialty lending companies (who are unregulated), non-bank loans are similar to merchant cash advance loans in their repayment method: payments are paid back on a daily basis or weekly basis. These loans are by-and-large unsecured loans that use business performance data — cash flow, credit score, even social media information — in order to determine credit worthiness.  As such their loan amounts are usually pretty small, less than $100,000 or so. The payments are usually two to eight percent of the small business’ monthly revenue, as well as the granting of warrants (an equity position) in the small business.  As such, these too, can be very expensive, depending on the amount of the warrant “give-up”. Microbusinesses and cyclical small businesses often use these non-bank loans as substitute for a lack of personal equity to invest in the business. These short-term business loans charge a higher interest rate than traditional bank loans but not as high as merchant cash advances loans.




Think of peer-to-peer loans as an angel investor loan but with many investors instead of one. A peer-to-peer loan is a short-term business loan where many investors pool their money to make a loan to a small business or start up. The platforms are mainly online, and they do all of the vetting of the small businesses who need the loans. Most of the time the small businesses have good credit scores, and hence have been in business for a year or so and they are just looking for a fast business loan to expand, meet an emergency or buy a piece of equipment it needs. The loan amounts are very limited, usually less than $35,000. These fast business loans are a viable option as a small business loan in small amounts for those who otherwise are considered non-bankable.




As you can see, there are many options available to those small businesses or start-ups considered non-bankable. What it comes down to is this: if you have a viable business or business idea, capital is available to finance you; it’s just a matter of finding the right capital.


The Commercial Finance Group is passionate about helping small businesses grow, which we do through offering factoring and asset-based loans.  Factoring is where a small business sells their accounts receivable in exchange for cash and uses that cash to fund working capital needs. An asset-based loan (ABL) is where a lender will “margin” your accounts receivable and inventory and the loan amount fluctuates as your accounts receivable and inventory changes. If you’re interested in factoring or ABL lending, give us a call today to get started!