Ask Sterling
Two lines from Sterling first, then the detail. If your question isn't here, the answer is usually in one of the funding guides.
- What is a factor rate, and is 1.35 a good one?A factor rate is the number you multiply the advance by to get what you pay back, so 1.35 on $10,000 means $13,500. It looks small because it isn't an annual rate, and that's exactly why you should convert it before you sign.Read the answer
- How do I convert a factor rate to an APR?You need three things: the cash you actually receive, the total you pay back, and how many payments it takes. Put those in a calculator and a 1.35 over six months comes out at about 126% a year, not 35%.Read the answer
- Is a merchant cash advance a loan, or something else?Not on paper. It's written as a sale of your future takings, which is why interest-rate caps usually don't bite, but if the contract behaves like a loan, courts and regulators have treated it as one.Read the answer
- How much can my business actually borrow?Less than the business is worth and more than most owners guess: the ceiling is set by what your bank account can repay each month. Work backward from the payment you can carry and you'll know your number before anyone quotes one.Read the answer
- Will asking about business funding hurt my credit score?Asking me doesn't touch your credit file, because Ask Sterling never runs a credit search. A funder might check later, they'll tell you first, and FICO says one extra hard inquiry usually costs less than five points.Read the answer
- What documents do lenders ask for when I need business funding?For short-term money it's mostly your recent business bank statements, because that's the cash they'll be repaid from. For a bank or SBA loan, add tax returns, financial statements and a reason for the money, and expect them to read all of it.Read the answer
- How fast can my business actually get funded?Faster money is usually dearer money, and the quickest products are the ones that read your bank statements instead of your tax returns. Most of the delay you can control is paperwork, so have it ready before you ask.Read the answer
- What is a holdback, and how much of my sales will it take?The holdback is the slice of each day's sales the provider keeps until the advance is paid back. A true percentage bends with slow months, but some contracts swap it for a fixed daily debit, so check which one you're signing.Read the answer
- Can I take a second cash advance while the first is still running?You can, but a second advance is usually dearer than the first and it comes out of the same bank account. If the first one is why you're short, a second one tends to make the hole deeper, not shallower.Read the answer
- Can I pay off a cash advance early, and will it save me anything?You can almost always pay it off early, but unless the contract gives you a discount, you'll still pay the full factor cost. Ask for the early payoff figure in writing before you assume you're saving anything.Read the answer
- Merchant cash advance or line of credit: which should I use?If you can get a line of credit, it's almost always the cheaper way to cover a short gap, because you only pay for what you use and only while you use it. A cash advance earns its place when the line isn't available or isn't big enough.Read the answer
- Do I need collateral to get business funding?Often not in the sense of pledging your building, but almost every funder takes some claim on something, whether that's the equipment you buy, your receivables or a personal guarantee. Ask exactly what they're securing before you sign.Read the answer
- What is a personal guarantee, and should I sign one?It's your promise to pay the business's debt from your own pocket if the business can't. Expect to be asked for one, so the job isn't avoiding it, it's knowing exactly what you're on the hook for.Read the answer
- What credit score do I need to get business funding?There isn't one number for the whole market, and anyone who quotes you one is guessing. Our funding partner's programs look for 600 or above, and below that you'll want to fix the score or lean on products that read your sales more than your history.Read the answer
- My bank said no to a business loan. Why, and what now?Banks say no for reasons you can usually find out, and federal rules give you a right to ask for them. Get the reason in writing first, because it tells you whether to fix something, wait, or try a different kind of funder.Read the answer
- Is an SBA loan right for my business?If you have the time, the paperwork and a sound business, an SBA loan is usually cheaper than anything short-term, so it's worth asking a bank about first. Ask Sterling's funding partner doesn't arrange SBA loans, so if that's your best route, go to an SBA lender directly.Read the answer
- What is a UCC filing, and why is there one on my business?A UCC-1 is a public notice, filed with the state, that a funder has a claim on some or all of your business assets. It's normal with business funding, but it lasts five years unless it's renewed or terminated, so make sure it comes off when you've paid.Read the answer
- How do I refinance a merchant cash advance?You refinance an advance by paying it off with money that costs less per year and gives you longer to repay. The trap is the 'renewal' that pays off your old advance with a new one and hands you a sliver of cash at a much higher real price.Read the answer
- Daily or weekly payments: which is better for my business?On price, it barely matters: weekly works out a few points cheaper because the money stays with you a little longer. Choose on cash flow, because a daily debit you can't see coming is harder to manage than one weekly payment you plan around.Read the answer
- What is a confession of judgment, and should I ever sign one?It's a signed statement that you agree, in advance, to a court judgment against you if the funder says you've defaulted, so they can skip the lawsuit. I'd treat one as a reason to stop and get a lawyer, because it hands the other side the fastest weapon in the contract.Read the answer
Ready for a straight answer?
Two minutes of questions. One funding specialist. No impact on your credit score.