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Best Small Business Loan Providers
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Best Small Business Loan Providers


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In today’s video we are going to continue our series on how to get paid, with a look at which are the best short loan providers for small business. So let’s get started! …

In today’s video we are going to continue our series on how to get paid, with a look at which are the best short loan providers for small business. So let’s get started!

Check the resources link in our main article here:

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  • 1. Best small business Loan Providers by
  • 2. Does your business need a loan for 6 months to a year? Small businesses used to have one main avenue for shortterm funding, merchant cash advances. Today, there are several much cheaper alternatives.
  • 3. Best Short-Short Term Loan Provider To Small Business Loans: On Deck Capital •Friendly toward brick and mortar businesses. •Approximately half the cost of a traditional merchant cash advance. •Company must have 1 year of history, over $100,00 in annual revenues, and be US based.
  • 4. Best Provider Of Shortterm loans To Online Businesses: Kabbage • Perfect for the 1 or 2 person eBay, Amazon, or Etsy merchant. • Approximately half the cost of traditional merchant cash advances.
  • 5. Cheapest source of funds to small business: Paypal •This option is by far the cheapest but . . . •The amount of available capital is tiny and requires your company receive lots of payments via paypal. Working Capital
  • 6. One Deck Capital Kabbage Online Type of Business Value of Loans / Merchant Cash Advance Online & Offline $5,000 - $250,000 (Typically, $30k $35K) (merchants that collect via PayPal or shell via eBay, Amazon or Etsy) $500 $50,000 PayPal Working Capital Online Merchant Cash Advance (generic) Online & Offline (merchants that collect via PayPal) (must receive payments by credit cards $1 K - $20K Up to 150% of an average month’s credit card receipts Maximum 8% of your annual paypal sales.
  • 7. One Deck Capital Length of Loan Origination Fee / Fee Deducted From Funds 3 month to 18 month (typically 6 months 2% ( come of its competitors like IOU central charge 4.95%) Kabbage 6 months PayPal Working Capital 3 - 11 months depending on your payment plan Merchant Cash Advance (generic) Typically 6 - 12 moths 5 - 10 % fee None None (Origination, Risk Assessment, or Professional Service Fee)
  • 8. One Deck Capital Cost of Funds Typically, 15% of the amount borrowed for a six month loan Kabbage 8 - 24 % of the amount being borrowed PayPal Working Capital 3 - 10% of the amount borrowed, the shorter repayment = lower rate Merchant Cash Advance (generic) 25 - 60% of the amount being borrowed
  • 9. PayPal Merchant Cash Advance (generic) One Deck Capital Kabbage Working Capital Collection Process Deduct fixed amount from bank account on daily basis 6 monthly payments with the first two being a greater amount A fixed percentage from 10-30% of funds deposited into you PayPal account A fixed percentage of credit card receipts, often in the range of 10-25% Personal Guarantee Yes, the positive is you build your credit score. No No No
  • 10. Personal guarantee: Loans vs. cash advances
  • 11. On Deck Capital is the only provider of loans. Kabbage and Paypal Working Capital are providing a “new and improved” merchant cash advance. A loan has both benefits and drawbacks compared to merchant cash advances. The main drawback is that On Deck Capital requires that the borrower personally guarantee the loan.
  • 12. If the business goes under, you are personally on the line to pay it back. If you take a merchant cash advance, generally speaking, you’re not pledging your personal finances to pay it back. The good side of a loan is that paying it back can help improve the credit rating of your business and lead to greater access to capital at lower rates.
  • 13. Versus interest rate
  • 14. We have talked about the amount that the borrower will need to pay back over the time of the loan. In the case of both On Deck Capital and Kabbage, a typical borrower can expect to pay back the principal (amount borrowed) + 15% of the amount borrowed. Based on these numbers, taking $100,000 will end up costing $115,000.
  • 15. However, the interest rate is not 15%. In fact, the effective annual interest on these loans is around 60%! There are two main reasons why there is such a large difference between the amount paid back and the effective annual interest rate.
  • 16. 1. The period for repayment in this example is six months, and not a year. 2. The borrower is paying back the principal throughout the term of the loan / merchant cash advance. In other words, if you average out the amount owed during the life of loan its about half of the original amount taken.
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