Debitum, Lithuania’s borderless SME finance platform, explains how cash advances from traders help businesses

Debitum, Lithuania’s borderless SME finance platform, explains how cash advances from traders help businesses

Lithuania-based funding platform team Debit notes that fundraising for SMEs can be quite a difficult and stressful experience.

Until recently, the choice was between the different types of loans provided mainly by traditional banking institutions, which involved cumbersome application processes and many days of waiting for a response, Debitum noted in his latest blog post. .

The company pointed out that another source of funding has become very popular and that it is called Merchant Cash Advances (MCA). As explained by Debitum, these first entered the market in the mid-90s and have become very popular in recent years.

Debit clarified that MCAs are not really loans in the “literal sense”. However, they are a form of capital investment “in exchange for a percentage of future credit or debit card sales, usually collected on a daily or weekly basis.”

The company also noted that Debit partner – Cubefunder loan maker has “a proven track record in providing MCA”.

While explaining how these products work, Debitum noted that the MCA application process is “just as rigorous as applying for a traditional loan.” They also mentioned that Cubefunder “asks candidates to show the … last 90 days of business transactions”. There is “no need for those overly complicated business plans,” Debitum wrote in his blog post.

The company added:

“Unlike banks, Cubefunder, and other MCA providers, focus on sales and revenue. The process typically takes two days, including checking the company’s creditworthiness. The efficiency of the process benefits both the MCA provider and the potential loan customer.

While commenting on what an MCA can be used for, the company noted:

“Cubefunder has a very open approach towards all applicants. The MCA can be used for almost any business related to the business, including unforeseen invoices, renovations, salaries, inventory replenishment, etc. at least three months of business activity, businesses that might not have a high credit rating, which may also be because it is a relatively new business, or those previously rejected by a bank . “

Then commenting on how much that can cost, Debitum explained that while a traditional bank loan typically has a Standardized Annual Interest Rate (APR), MCAs come with individual rates as well as the base cost of the advance. (ready).

Debitum further noted that by integrating the MCA concept into the non-business SME sector, they found that Cubefunder was able to use the MCA principle of “paying more when cash flow is strong and less when it is higher. weak “. Cubefunder “uses its proprietary software system to price each loan individually with a fixed cost of credit and a tailor-made, pre-agreed repayment plan designed to accommodate the company’s cash flow gaps,” added Debitum.

While explaining how and when repayments are made, the Debitum said that unlike the conventional loan with a repayment schedule, Cubefunder loans “take repayments based on sales”.

Debitum further noted that repayments are “typically made daily or on a weekly basis, and are tied to business bank accounts used by the borrower.” The repayment program is “very simple – from each sale an agreed percentage goes to the lender’s account… Repayments are therefore stress-free and hassle-free,” the company says.

Debitum also clarified:

“Cubefunder doesn’t charge prepayment penalty fees and their loans have a fixed cost of credit, so no additional interest is paid on the loan. Even if there is a missed daily payment, once the amount due within the agreed time is paid, there is no additional charge.

Although MCA-style commercial loans can end up costing considerably more than conventional loans, they are considered to be more convenient “in terms of efficiency of the application process, and once approved the funds are ready for use. a few hours”. The borrower “does not need to have collateral to secure the loan and for companies with limited assets this can be a major advantage,” the company said.

Debitum also mentioned that MCAs can be attractive to investors, especially in the short term, and Cubefunder has “a proven track record as a successful and diligent loan originator”. At present, investors can achieve “a 10% return with Cubefunder compared to the 8.5% average with other loan originators on the Debitum platform”.

Added flow:

“Reviews of Cubefunder and its quality of service are positive. His clients praise his fast and efficient service and that everything is clearly explained.

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