Much like other commercial loans, an ACH loan is designed to get companies the cash they need quickly. The critical difference between an ACH loan and different loan types is how the loan gets paid back. Versus writing a check or sending in payment in another way, your charges are automatically withdrawn from a checking account with an ACH loan. In this article, we look at ACH loans and discuss some of the benefits.
ACH Loan Benefits
Small business loans can have numerous benefits. From getting you the money needed for expansion or even just for weathering tough economic times, a business loan has been a lifesaver for so many—especially over the past two years. But what is it about ACH loans specifically that makes them particularly attractive to many businesses in need of additional capital?
– They are speedy loans to get. Generally, most ACH loans will only take a couple of days between the application and the actual funding of the loan. When you need money quickly, an ACH loan is an ideal option.
– Even those with lower credit scores can qualify. In other words, bad or low credit isn’t necessarily going to get you a rejection with an ACH loan. Your interest rates may be higher, but you can still qualify in many instances.
– You can have been in business for less than two years. Many companies who get ACH loans will have only been in business for a year. Meaning, you do not have to have been in operation for over two years.
– Lenders take a more prominent picture approach. Because alternative and online lenders often give ACH loans, you are not relegated to one score. Your application is evaluated based on the entire picture of your company. What value does it add, and where is it headed?
– We cannot stress enough: the speed of the loan process is unmatched. From the time you apply for an ACH loan until the funds are put into your business account, you are looking at two to three days.
Repaying an ACH Loan
The acronym ACH stands for Automated Clearing House. You likely have bills already that are paid via ACH. If a car payment, for example, is automatically deducted from your bank account every month, then this is an ACH payment. This happens on the same day every month, and the amount tends to be the same for every payment.
Depending on the terms of your ACH business loan, lenders can withdraw the money from the account, weekly or monthly—in some cases, the loan terms may even have a daily repayment schedule. The one thing to know is that ACH loan payments are fixed; thus, you can always predict how much you will be paying, whether weekly, monthly, or daily.
Applying for an ACH Loan
If you do determine that an ACH loan makes sense for your small business, you want to make sure that you have all of your documentation ready to go. Keep in mind, too, that the lender will review your business checking account as part of the application process. They could go back as far as six months. They do this to get a sense of a balance you have at the end of every month, thereby ensuring that you can repay the loan comfortably. This will also give them a clearer sense of how much you can qualify for and the corresponding loan terms.
Among the other pieces of information a lender may ask you for in evaluating your loan application are tax returns, financial statements to include profit and loss and cash flow statements, any leases you have, credit history and any licensing the company has, among other documents that can be requested. The quicker you can provide the information needed, the faster your ACH loan can be processed.
First Union Lending is Here to Help
We want our customers to thrive and grow. This is why we do what we do. With short-term loans, ACH loans, SBA loans and lines of credit among other loan products, we have the resources to help. Call today and let’s get started together!