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:

1. Best small business Loan Providers
by FitSmallBusiness.com

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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