If you are a merchant whose business type is on lender’s restricted list, or you have low batch counts, low tickets, or sub 500 credit, you may qualify for a starter program. The starter program allows merchants to develop a relationship with private lenders.
Starter programs are less flexible with their rates and holdback percentages and are geared towards merchants who cannot receive any sort of funding otherwise. A starter program is a great way for merchants to get their foot in the door with lenders and get that extra working capital into the business.
Some lenders have static starter programs whereby the merchant can receive a fixed amount of money consistently whenever the merchant needs. However, the amount advanced will not increase after having taken multiple starter advances. These programs are generally more expensive and have higher holdback percentages.
However, some lenders have graduated starter programs whereby the merchant receives an advance at a lower factor rate and a lower holdback percentage than the static programs. Once the advance is paid off, the lender is willing to advance up to 50% of what the merchant is currently processing. The third advance the merchant is graduated to a regular advance whereby he qualifies for the full amount requested. This is obviously the better route than static starter programs, but it is a more competitive program to be approved for.
For starter programs, most lenders require the last four months recent merchant processing statements, 3 months most recent bank statements, a voided check, and a driver’s license. The merchant must switch over his processor as ACH and lockbox methods are not available for this option of funding. The most critical check is the landlord reference. If the merchant is not current with his rent or mortgage, then he will not qualify for this advance. This point is not negotiable when obtaining a cash advance.