The Ultimate Review of Ignite Working Capital and Its Alternatives
In your search for small business loans, you’re going to come across more than a few names. Some of these names will be catchy and exciting, but not all of them will be names that you’ll want to work with.
Before you dive into working with a small business financing company, it’s crucial that you read up on them through third-party reviews. If you’re hoping to read up on Ignite working capital before entering a funding agreement with them, then you’ve come to the right place.
Here’s all you need to know about Ignite working capital before you sign the dotted line on that loan agreement.
What is Ignite Working Capital?
First and foremost, let’s take a moment to solidify what exactly we’re reviewing. To answer the question of what Ignite working capital is, we need to break it down into more manageable terms.
Before we establish what Ignite working capital is, let’s take a look at a) what working capital is and b) what Ignite Capital is.
What is Working Capital?
The first step to understanding Ignite working capital? Understanding the concept of working capital.
Working capital is the money that a business has available to take care of its short-term expenses, like operational costs, payroll, and accounts payable.
Basically, working capital is a catch-all term for money that isn’t designated for a specific, singular purchase. The money you us to pay your employees? Working capital. The money you use to buy a new refrigerator for your kitchen? Not so much.
Working capital is what most business owners are seeking when they seek business funding, and some do so without knowing its technical name.
What is Ignite Capital?
The next term we need to tackle in order to understand what Ignite working capital is? Ignite Capital.
This term is a little different than working capital, simply because it’s a very specific name of a company. As such, we’ll give you a bit of biographical information rather than definitions.
This company is a conglomerate of independent sales offices operating under the payment processing company Ignite Payments. Though they all fall under the same name, each sales office within Ignite Capital doesn’t necessarily answer to the same regulating body. As such, the customer experience will vary drastically from office to office.
So, Ignite Working Capital is...
By combining these two bits of information on working capital and Ignite Capital, we can find that Ignite working capital is funding that this company provides to companies who need help with day-to-day costs. Plus, be sure to note that with Ignite working capital, you’ll acquire funding for operational costs through an independent sale office.
And there you have it! Ignite working capital is easy to understand after you break down all of the jargon and fancy names.
How Does Ignite Working Capital work?
Now that we’ve broken down what Ignite working capital is, it’s time to see what Ignite working capital can do for your business practically.
Ignite working capital will provide your business funds for covering operational costs in the form of a merchant cash advance.
What does that mean, exactly?
Well, a merchant cash advance is a form of business funding in which a lender buys your business’s future credit card revenues. Technically speaking, a merchant cash advance isn’t even a loan. Nevertheless, because merchant cash advances have the same practical use as a loan—acquiring funding for your business—they’re often referred to as synonymous to business loans.
Where merchant cash advances really differ from small business loans, though, is in how they’re repaid. You’ll repay your merchant cash advance automatically through your credit card processing technology—everyday, your lender will intercept your business’s credit card revenues and take a certain percentage of these daily revenues as your form of daily payment until your advance—plus interest—is repaid in full. So, when business is good, your daily payment will be higher, but when business is slow, your daily payment will be lower as a result.
It’s crucial to note that merchant cash advances are very much double-edged swords. For one, they’re one of the most accessible types of business funding out there—many business owners who have a hard time qualifying for other types of business funding often flock to merchant cash advances for working capital.
That said, merchant cash advances can also really stifle a business’s cash flow—high rates and daily payments are a recipe for choking up much-needed funds. In fact, the factor rates on some merchant cash advances, when converted to APR’s, can reach the triple-digits.
All in all, short-term funding will always be tough on a small business’s budget, but repaying merchant cash advances can be particularly hard to manage. And the merchant cash advances that Ignite working capital comes as are no exception.
Because Ignite Payments is a credit card processing company, providing merchant cash advances was a logical next step for them. Unfortunately, that doesn’t necessarily mean that they’re doing it well. The way that Ignite Capital is structured—with independent sales offices reporting to no overseeing entity—makes for disorganization and sometimes even shady lending practices.
Overall, if you’re thinking about funding your business with a Ignite working capital merchant cash advance, we recommend you first explore your other working capital options before doing so.
Seeking Other Sources of Working Capital
Ready to take our advice?
We’ve made it easy for you to search through your other working capital options by compiling them into one, consolidated list.
Here’s a comprehensive guide to all you need to know about the very best kinds of working capital loans out there.
Business Credit Cards
Now, you might be surprised to see business credit cards topping our list of what’s assumed to be a list of small business loans.
However, because we’re exploring all of your best working capital options, we’d be remiss not to suggest looking to business credit cards for help with everyday operation costs.
Let’s take a look.
The Best Business Credit Cards for Working Capital
For starters, business credit cards can offer some pretty lucrative perks that no other form of working capital can. Not only will you be able to access a revolving line of credit with a business credit card, but you’ll also gain access to perks like cash back, travel miles, welcome bonuses, and even 0% intro APR periods.
One of these perks that should be of particular interest to small business owners in need of working capital is the 0% intro APR period—this perk means that, for a certain amount of time after account opening, you’ll be able to carry an interest-free balance on your card, as long as you make your minimum monthly payments on time.
This means that, during a 0% intro APR period, your business credit card will act like a free loan. Sound pretty great, right?
If you want to pursue working capital through a business credit card with a 0% intro APR period, we suggest looking into the business credit card with the longest 0% intro APR period on the market—the American Express Blue Business Plus.
Business Lines of Credit
Next up on our list of the top working capital alternatives to Ignite working capital is the business line of credit.
Though this working capital source will function much like a business credit card—picture a revolving line of credit that your business can draw from as needed—there are a few fundamental differences between these two working capital sources.
First and foremost, business lines of credit work strictly in cash, whereas business credit cards will charge you extra for cash advances.
Additionally, business lines of credit tend to come with longer repayment terms. Meanwhile, though they might provide grace periods, almost every business credit card will have a repayment term of one month.
Finally, business lines of credit and business credit cards both offer their own savings advantages. While business lines of credit tend to have lower APR’s, business credit cards offer lucrative perks that business lines of credit can’t.
Now that we’ve established what a business line of credit is generally, let’s take a look at the numbers on what it can offer your business.
- Credit limits ranging from $10,000 to over $1 million
- Repayment terms as short as 6 months and as long as 5 years
- Interest rates that range from 7% to 25%
- At least 6 months in business
- At least $50,000 in annual revenue
Though business lines of credit don’t come with the flashy perks that business credit cards do, they’re a trusty source of affordable and flexible financing, as you’ll see in the ranges of terms that they typically come with:
Another great perk of working capital in the for of a business line of credit?
It’s remarkably accessible.
In order to be eligible for a business line of credit, you’ll just need to check of the following 2 minimum requirements:
Finally, many business owners need funding fast, and working capital that will come through after a long underwriting process, no matter how affordable it ends up being, is of no help to time-sensitive expenses. Fortunately, business lines of credit can fund in as little as 1 business day.
Rounding out our list of the top working capital alternatives to Ignite working capital is Invoice financing.
This type of working capital loan provides funds to business owners who are patiently awaiting outstanding invoices from customers. With invoice financing, your outstanding invoices will function as a form of collateral, and your lender will advance you up to 90% of your invoice’s value.
With every week your invoice is outstanding, your financing will accumulate more interest, and when you invoice is fulfilled, your lender will intercept it, claim the percentage that they advanced you, plus interest, and then forward the remaining invoice worth to your business.
If your business’s cash flow has been stifled by overlapping outstanding invoices, then invoice financing could be the perfect working capital solution for you.
Let’s take a look at the details.
- Advances of about 50% to 90% of your total invoice value
- Repayment terms generally mirror the amount of time that the invoice is outstanding
- Interest rates will typically look like a 3% factor fee, plus a percent for every week your invoice is outstanding
- At least 6 months in business
- At least $50,000 in annual revenue
Because of the unique nature of invoice financing, the terms that it typically comes with will look a little different than your average loan terms.
Here are the ranges of terms you’ll likely see if you get an invoice financing offer:
Because invoice financing is a form of self-secured financing, it will be one of the most accessible forms of working capital. In fact, because repayment depends on your invoice’s quality, your own personal credit won’t even be taken into account in many case. Rather, your invoiced customer’s personal credit score might affect if you qualify or not.
However, as far as your own qualification that will make you eligible for invoice financing, you’ll just need to make sure that you fulfill two requirements:
Additionally, invoice financing is yet another swift source of working capital—if you’re able to move quickly with paperwork and correspondence with your lender, then you can get an advance for you outstanding invoices in as little as a single business day.
The Bottom Line for Ignite Working Capital
There you go—all of the pertinent information on deciding whether Ignite working capital is the right funding choice for you. Now that you’ve got all of this information under your belt, you’ve got all the tools to decide on your own whether or not to move forward with Ignite Capital.
If you have another option—and, with all of the sources of working capital out there, you almost certainly do—we suggest you take it.