ACH Business Loan: What Is It, and What Are the Benefits?

One of the more innovative products available in the alternative lending marketplace is an ACH loan (sometimes called an ACH advance or cash flow loan).

ACH business loans are a broad category of loans for companies that are specific in the way in which they are paid back. So let’s explore how to apply for an ACH loan, what repayment looks like, and what the benefits are:

What Is an ACH Business Loan?

ACH business loans are short-term financing designed for businesses with poor credit history. After negotiating terms, the lender deposits the funds into the business’s checking account through an automated clearing house (ACH) transfer. Repayments are automatically deducted through ACH transfers based on the agreed-upon schedule of each contract.

Because lenders don’t focus on credit scores, rates are generally higher than those of most traditional products. ACH loans almost exclusively use factor rates, which are similar to interest rates but with a few unique differences.

The main characteristics of ACH business loans can be summed up in the following:

• Automatic Repayments – payments are automatically withdrawn from your bank account using the Automated Clearing House network.
• Quick Access To Funds – once approved, the loan amount is usually deposited quickly into your bank account.
• Frequent Withdrawals – repayments can occur on a daily, weekly, or monthly basis, depending on the terms set by the lender.
• Cash-flow Based Lending – eligibility and loan amount are often determined based on your recent bank statements and cash flow.
• High Approval Rate – compared to other types of financing, ACH business loans are easier to qualify for, especially if you have a steady cash flow.
• Short-Term Nature – ACH loans are typically short-term and often used to cover immediate or emergency expenses.

How Do ACH Business Loans Work?

ACH business loans work similarly to other types of business financing, just on a shorter timeline and with a unique disbursement process. Here’s a brief overview of the process:

• The borrower applies for an ACH loan
• The lender reviews their application and determines their eligibility
• If approved, the borrower reviews the offered terms and finalizes a contract if it makes sense
• The lender initiates an ACH transfer to deposit the funds directly into the business’s checking account
• The lender deducts each payment directly from the account they deposited the funds

The frequency of payments will depend on the terms you’ve agreed to, but most ACH loans are repaid on a daily, weekly, or bi-weekly schedule. Although similar, ACH business loans are different from most revenue-based financing options.

What Are The Benefits of ACH Business Loans?

ACH business loans come with a wide variety of benefits – let’s explore some of them:

• Fast approval process, sometimes within hours, depending on the lender
• Funding deposited within 24 hours of finalizing a contract
• Less intensive eligibility criteria
• No collateral requirement

The biggest benefit is that the application and approval process is typically very speedy and typically takes a matter of hours, up to a few business days.

If the lender is confident that your business is viable and headed in the right direction, your application is likely to be approved.

What Are The Repayment Terms of ACH Loans?

ACH stands for Automated Clearing House. Just as a payment for a TV cable bill or utility bill is automatically withdrawn from a bank account, the repayment amount of your ACH loan is automatically withdrawn on a prescribed date – which can be daily, weekly, or monthly (depending on the terms and conditions of the loan agreement).

What’s more, the amount of ACH business loans is always fixed and predictable, which is important because it means that you will not experience any unexpected — and unwelcome — surprises when you manage your cash flow.

Who Can Use an ACH Loan?

Any business can seek out an ACH business loan, regardless of age or industry. Still, because there is no credit score requirement, they’re most popular among businesses with less established or poor credit histories.

Here are two scenarios where an ACH loan helped a business reach its goals.

• After a slow month, a restaurant discovers they’re unable to make payroll that week. Instead of having the uncomfortable conversation with their employees, they leverage an ACH loan to access the capital they need to cover their liabilities.
• An eCommerce business notices that its supplier is offering a bulk discount on inventory ahead of a major busy season. Using an ACH loan, the business increases its purchasing power to lock in the discount without jeopardizing cash flow, projecting a major ROI boost.
• A construction company finds that they’re running out of materials mid-way through a project. They use an ACH loan to purchase additional supplies and keep their project on track.

There are many situations outside of the abovementioned list where ACH business loans can help a business take advantage of an opportunity or solve a problem.

For more information about how this type of financing can help in your specific situation, reach out to our Business Finance Advisors.

How Do You Qualify for ACH Business Loans?

Qualifying for an ACH loan is much easier than other financing solutions because they lack robust credit score requirements. Here’s how to qualify for an ACH loan with National Business Capital.

• 1+ Year in Business
• $500,000+ in annual revenue

Lenders focus on your profitability, rather than your credit history, to determine eligibility. You’ll need to demonstrate that your business can repay the borrowed amount without issue to secure the best possible terms.

How Do You Apply for an ACH Business Loan?

When you apply for an ACH business loan, a prospective lender will review your business’s checking account statements (going back several months).

Why would they do this? Simply to get a sense of your average daily closing balance, which helps them determine how much of a loan to offer you, and for how long.

If you decide to move forward, your ACH loan agreement will include (among other details) the amount of the loan, the duration, the interest rate, the cost of borrowing, and the amount that you’ll pay back on a regular basis. That is where the “ACH part” of an ACH loan comes back into the picture.

Finding the right ACH business lender takes your time, patience, and focus away from your business, which is why many entrepreneurs choose to work with a marketplace – like National Business Capital – to streamline the process.

Here’s an overview of our application process.

• Apply Securely Within Minutes – Move through our streamlined application within minutes and upload your business documents with zero risk.
• Review Your Offers – Compare your offers with expert advice from our team and select the best one for your specific circumstances.
• Receive Your Money – Seize an immediate opportunity to grow your business or tackle a new challenge with confidence.

With one application, you unlock the most competitive offers your business qualifies for from our network of top B2B lenders. Apply now to get started!

Why Choose National Business Capital for ACH Loans?

At National Business Capital, we proudly offer ACH business loans to clients across the country who use the funds to hire new staff, purchase new equipment, launch marketing campaigns, expand locations, and cover other key expenses and investments to keep their businesses strong and successful.

To learn more, contact our team today at (877) 482-3008 for a no-hassle, no-obligation consultation. We’ll empower you with transparent and objective information, so you can make a business financing decision that is best for YOU.

Or, fill out our digital ACH application online to get your ACH loan in as little as 24 hours!