New Jersey’s Fastest Growing Industries and How to Finance Them

New Jersey’s Fastest Growing Industries and How to Finance Them

In the heart of the Northeast, New Jersey is experiencing a renaissance across various sectors, transforming its economic landscape and creating exciting opportunities for businesses and investors alike. As a hub of innovation and commerce, the Garden State is nurturing industries that are not just growing but thriving, setting the stage for a prosperous future.

Understanding New Jersey’s Economic Landscape

New Jersey’s economy, the eighth-largest in the United States, is a diverse powerhouse that continues to evolve and adapt to global trends. With a gross state product (GSP) of over $600 billion, New Jersey punches well above its weight in economic output relative to its size.

The state’s strategic location—nestled between New York City and Philadelphia—provides unparalleled access to markets, talent, and resources. This geographic advantage, combined with a highly educated workforce and robust infrastructure, creates a fertile ground for business growth and innovation.

Why Understanding Growing Industries and Financing Options Matters
Why Understanding Growing Industries and Financing Options Matters

Why Understanding Growing Industries and Financing Options Matters

For entrepreneurs, investors, and existing businesses in New Jersey, staying informed about the fastest-growing industries and available financing options is crucial. This knowledge can:

  1. Guide strategic business decisions and investments
  2. Identify new market opportunities
  3. Help businesses align with state economic priorities
  4. Facilitate access to industry-specific resources and support
  5. Improve chances of securing appropriate financing

By understanding these dynamics, stakeholders can position themselves to ride the wave of New Jersey’s economic growth and contribute to the state’s vibrant business ecosystem.

New Jersey’s Economic Snapshot: A State on the Rise

Recent economic indicators paint a picture of a state that’s not just recovering from recent global challenges but actively thriving:

  • Employment Growth: As of 2023, New Jersey’s unemployment rate has dropped to 3.4%, lower than the national average of 3.6%.
  • Wage Growth: The state has seen a 4.5% increase in average wages over the past year, outpacing the national average of 4.1%.
  • GDP Growth: New Jersey’s real GDP growth rate was 3.2% in the last quarter, compared to the national rate of 2.9%.
  • Venture Capital Investment: The state attracted over $5 billion in venture capital in 2022, a 25% increase from the previous year.

These figures underscore New Jersey’s robust economic health and its attractiveness as a business destination. The state’s proactive policies and strategic investments in key sectors have contributed to this positive trajectory.

Top 5 Fastest Growing Industries in New Jersey

  1. Technology and Innovation

New Jersey’s tech sector is booming, with particular strength in fintech, healthtech, and cybersecurity. The state’s proximity to major financial centers and its strong pharmaceutical heritage have created a perfect storm for innovation in these areas.

  • Fintech: Companies like Interchange Financial in Jersey City are revolutionizing payment systems and financial services.
  • Healthtech: Newark-based Audible Health is leveraging AI to improve patient care and health outcomes.
  • Cybersecurity: Edison’s Stellar Cyber is at the forefront of AI-driven security operations.

Notable tech hubs and incubators fueling this growth include:

  • Newark Venture Partners
  • Einstein’s Alley in Central Jersey
  • Bell Works in Holmdel

  1. Life Sciences and Biotechnology

Building on its reputation as the “Medicine Chest of the World,” New Jersey continues to lead in life sciences and biotechnology.

  • Pharmaceutical Industry: The state is home to 14 of the world’s 20 largest pharmaceutical companies, including giants like Johnson & Johnson and Merck.
  • Medical Device Manufacturing: Companies like BD (Becton, Dickinson and Company) in Franklin Lakes are driving innovation in medical technology.

The New Jersey Economic Development Authority’s BioNJ initiative supports this growth, offering resources and networking opportunities for biotech startups and established firms alike.

  1. Clean Energy and Sustainability

New Jersey is making significant strides in renewable energy and sustainability, aligning with global trends and state mandates for cleaner energy sources.

  • Solar Energy: The state ranks 7th nationally in solar installation, with companies like Sunrun expanding their New Jersey operations.
  • Wind Energy: The New Jersey Wind Port project is poised to make the state a hub for offshore wind energy production.
  • Green Technology: Princeton-based Niron Magnetics is developing rare-earth free magnets for sustainable energy applications.

  1. Advanced Manufacturing

New Jersey’s manufacturing sector is evolving, embracing cutting-edge technologies and high-value production.

  • Aerospace and Defense: Companies like Lockheed Martin in Moorestown are driving innovation in defense systems.
  • 3D Printing: Glassboro-based Rowan University has partnered with local businesses to advance 3D printing technologies.
  • Smart Manufacturing: The New Jersey Manufacturing Extension Program (NJMEP) is helping traditional manufacturers adopt Industry 4.0 technologies.

  1. Logistics and E-commerce

New Jersey’s strategic location makes it a natural fit for logistics and e-commerce operations.

  • Strategic Advantage: The state’s proximity to major population centers and its extensive transportation infrastructure (including the Port of New York and New Jersey) make it ideal for distribution.
  • E-commerce Growth: Companies like Amazon have significantly expanded their New Jersey footprint, with multiple fulfillment centers across the state.
  • Last-Mile Delivery: Innovative companies like Gather AI in Hoboken are optimizing warehouse operations and last-mile delivery using drone technology.
Factors Driving Industry Growth in New Jersey
Factors Driving Industry Growth in New Jersey

Factors Driving Industry Growth in New Jersey

The Garden State’s economic renaissance isn’t happening by chance. Several key factors are fueling the growth of industries across New Jersey:

Skilled Workforce and Educational Institutions

New Jersey boasts one of the most educated workforces in the nation. With over 40% of adults holding a bachelor’s degree or higher, the state provides a deep talent pool for growing industries.

  • World-Class Universities: Institutions like Princeton University, Rutgers University, and the New Jersey Institute of Technology are producing top-tier graduates in fields such as technology, life sciences, and engineering.
  • Vocational Training: The state’s network of community colleges and vocational schools ensures a steady supply of skilled workers for manufacturing and technical roles.

Proximity to Major Markets

New Jersey’s strategic location provides unparalleled access to major markets:

  • New York City: Just across the Hudson River, offering access to the world’s financial center and a massive consumer market.
  • Philadelphia: Southern New Jersey is within easy reach of this major city, expanding market opportunities.
  • Northeast Corridor: The state’s central position in the Northeast provides access to a market of over 60 million consumers within a 250-mile radius.

State Incentives and Programs

New Jersey offers a range of incentives to attract and retain businesses:

  • New Jersey Economic Recovery Act of 2020: This $14 billion package includes tax credits for job creation, redevelopment incentives, and innovation support.
  • Research and Development Tax Credit: Encourages innovation by offering tax credits for R&D expenses.
  • Grow NJ Assistance Program: Provides tax credits to companies creating or retaining jobs in the state.

Infrastructure and Transportation Networks

New Jersey’s robust infrastructure supports business growth and logistics:

  • Ports: The Port of New York and New Jersey is the largest port on the East Coast, facilitating international trade.
  • Airports: Newark Liberty International Airport provides global connectivity for businesses.
  • Rail and Road: An extensive network of railways and highways, including the New Jersey Turnpike, facilitates efficient transportation of goods and people.

Financing Options for Growing Industries

As industries in New Jersey continue to expand, access to capital becomes crucial. Let’s explore the financing options available to businesses in these growing sectors:

  1. Traditional Bank Loans

Traditional bank loans remain a popular financing option for established businesses with strong credit profiles.

Pros:

  • Lower interest rates compared to alternative financing
  • Building a relationship with a bank can lead to future financial opportunities

Cons:

  • Strict approval criteria
  • May require significant collateral
  • Lengthy approval process

How to improve chances of approval:

  • Maintain a strong credit score (both business and personal)
  • Prepare a detailed business plan and financial projections
  • Have collateral ready to secure the loan
  • Build a relationship with your banker before applying

  1. SBA Loans

The Small Business Administration (SBA) partners with lenders to provide loans with favorable terms to small businesses.

Types of SBA loans available in New Jersey:

  • SBA 7(a) loans: General-purpose business loans up to $5 million
  • SBA 504 loans: For major fixed assets like equipment or real estate
  • SBA Microloans: Smaller loans up to $50,000 for working capital or inventory

Industry-specific SBA programs:

  • SBA Biotech Pilot Program: Streamlined application process for biotech companies
  • SBA Export Loan Programs: For businesses engaged in international trade

  1. Venture Capital and Angel Investors

For high-growth startups, particularly in tech and life sciences, venture capital and angel investors can provide significant funding.

New Jersey’s venture capital landscape:

  • Newark Venture Partners: Focuses on B2B tech startups
  • NJEDA Venture Fund: State-backed fund investing in New Jersey-based companies
  • Jump Start New Jersey Angel Network: Group of angel investors supporting early-stage companies

How to attract investors in growing industries:

  • Develop a scalable business model
  • Build a strong, diverse founding team
  • Create a compelling pitch deck
  • Leverage New Jersey’s networking events and startup incubators

  1. Merchant Capital and Alternative Financing

For businesses seeking more flexible financing options, merchant capital and alternative financing can be attractive.

Benefits for fast-growing businesses:

  • Quicker approval process compared to traditional loans
  • More flexible repayment terms
  • Often available to businesses with less-than-perfect credit

How New Bridge Merchant Capital supports NJ industries:

  • Tailored financing solutions for specific industry needs
  • Quick approval process to support rapid growth
  • Flexible repayment options based on business cash flow
  • Industry expertise to provide value beyond just financing

  1. State and Local Funding Programs

New Jersey offers various state-sponsored funding programs to support business growth.

New Jersey Economic Development Authority (NJEDA) programs:

  • NJ CoVest Fund: Provides seed funding for technology and life sciences companies
  • Edison Innovation Fund: Supports technology and life sciences companies with growth capital
  • Clean Energy Program: Offers financing for clean energy projects

Industry-specific grants and incentives:

  • Opportunity Zone Program: Tax incentives for investments in designated low-income areas
  • Technology Business Tax Certificate Transfer Program: Allows tech and biotech companies to sell R&D tax credits
  • Manufacturing Equipment and Employment Investment Tax Credit: For businesses investing in manufacturing equipment

Navigating these financing options can be complex, especially for businesses focused on rapid growth and innovation. That’s where expert guidance becomes invaluable. At New Bridge Merchant Capital, we specialize in helping New Jersey businesses in fast-growing industries find the right financing solutions to fuel their growth.

Our team understands the unique challenges and opportunities in each of New Jersey’s booming industries. We can help you evaluate your options, from traditional bank loans to alternative financing methods, and create a tailored funding strategy that aligns with your business goals.

Ready to explore how the right financing can accelerate your business growth in New Jersey’s thriving economy? Contact New Bridge Merchant Capital today at 844-228-0593. Let’s work together to turn your industry leadership aspirations into reality.

Challenges and Opportunities in New Jersey’s Growing Industries

While New Jersey’s industrial landscape is ripe with potential, businesses must navigate both challenges and opportunities to thrive in this dynamic environment.

Potential Obstacles for Businesses in Growing Industries

  1. Regulatory Compliance: Particularly in sectors like life sciences and clean energy, navigating complex regulatory environments can be challenging.
  2. Talent Retention: With fierce competition for skilled workers, retaining top talent can be difficult, especially for smaller companies.
  3. High Operating Costs: New Jersey’s prime location comes with higher costs for real estate, utilities, and labor compared to some other states.
  4. Technological Disruption: Rapid technological changes can quickly make products or services obsolete, requiring constant innovation.
  5. Access to Capital: Despite numerous financing options, securing adequate funding at the right terms can still be challenging, especially for early-stage companies.

Emerging Opportunities and Future Growth Predictions

  1. Green Technology Integration: As New Jersey pushes towards its clean energy goals, businesses across all sectors will find opportunities in sustainability and green tech integration.
  2. AI and Machine Learning: The state’s strong tech sector is poised to leverage AI advancements, creating opportunities in fields from healthcare to finance.
  3. Biotech Breakthroughs: New Jersey’s life sciences sector is expected to lead in personalized medicine and gene therapy developments.
  4. Advanced Manufacturing: The integration of IoT and smart technologies in manufacturing processes presents significant growth potential.
  5. E-commerce Evolution: With New Jersey’s strategic location, businesses are well-positioned to capitalize on the continued growth of e-commerce and last-mile delivery innovations.

How to Choose the Right Financing Option

Selecting the appropriate financing strategy is crucial for businesses in New Jersey’s growing industries. Here’s how to approach this important decision:

Factors to Consider Based on Industry and Growth Stage

  1. Industry-Specific Needs:
    • Tech startups might lean towards venture capital for rapid scaling.
    • Manufacturing companies might benefit from equipment financing or SBA loans.
    • Biotech firms could explore industry-specific grants and R&D tax credits.
  2. Growth Stage:
    • Early-stage companies might consider angel investors or seed funding.
    • Established businesses with steady revenue could qualify for traditional bank loans.
    • High-growth companies might benefit from venture debt or mezzanine financing.
  3. Cash Flow Patterns:
    • Seasonal businesses might prefer lines of credit for flexibility.
    • Companies with large contracts might benefit from invoice factoring.
  4. Time Horizon:
    • Short-term needs might be met with merchant cash advances.
    • Long-term expansion plans might be better served by term loans or equity financing.

Importance of a Tailored Financing Strategy

A one-size-fits-all approach rarely works when it comes to business financing. A tailored strategy should:

  • Align with your business model and growth projections
  • Balance the cost of capital with growth potential
  • Provide flexibility to adapt to changing market conditions
  • Support both short-term operations and long-term strategic goals

This is where partnering with a knowledgeable financial advisor becomes invaluable. They can help you navigate the complexities of various financing options and create a strategy that’s optimized for your specific business needs.

The Role of New Bridge Merchant Capital in NJ’s Industrial Growth

At New Bridge Merchant Capital, we’re committed to fueling the growth of New Jersey’s booming industries through specialized financing solutions.

Specialized Financing Solutions for Growing Industries

  • Flexible Merchant Cash Advances: Ideal for businesses with fluctuating cash flows or seasonal demands.
  • Equipment Financing: Tailored for manufacturing and tech companies needing to invest in cutting-edge machinery or hardware.
  • Working Capital Loans: Designed to help businesses manage day-to-day operations and take advantage of growth opportunities.
  • Industry-Specific Financing Packages: Customized solutions that address the unique needs of each growing sector in New Jersey.

Success Stories and Testimonials

  • TechInnovate NJ: A Newark-based software startup secured $500,000 in growth capital, enabling them to double their development team and secure a major contract with a Fortune 500 company.
  • GreenEnergy Solutions: This Princeton clean energy firm used our equipment financing to install solar panels across 50 commercial properties, increasing their revenue by 300% in 18 months.
  • BioAdvance Therapeutics: Our working capital loan helped this New Brunswick biotech company bridge the gap between research phases, leading to a breakthrough in their clinical trials.

“New Bridge Merchant Capital understood our unique needs as a high-growth tech company. Their flexible financing allowed us to seize market opportunities we would have otherwise missed.” – CEO, TechInnovate NJ

Conclusion

New Jersey’s industrial landscape is brimming with potential. From the bustling tech hubs of Newark to the innovative life sciences corridors of Central Jersey, opportunities for growth abound. The state’s strategic location, skilled workforce, and supportive business environment create a perfect storm for industrial expansion and innovation.

However, navigating this dynamic environment requires more than just a great idea or product. It demands a keen understanding of industry trends, awareness of potential challenges, and most importantly, access to the right financial resources at the right time.

This is where the choice of a financing partner becomes crucial. The right partner doesn’t just provide capital; they offer insights, flexibility, and a deep understanding of your industry’s unique dynamics.

We encourage you to explore the financing options available to you, considering how they align with your business’s specific needs and growth trajectory. Remember, the goal isn’t just to secure funding, but to find a financial solution that propels your business forward in New Jersey’s competitive landscape.

Next Steps

Ready to take your New Jersey business to the next level? New Bridge Merchant Capital is here to help. Our team of financial experts specializes in providing tailored financing solutions for businesses in New Jersey’s fastest-growing industries.

Whether you’re a tech startup in Newark, a biotech firm in New Brunswick, or a clean energy company in Atlantic City, we have the expertise and resources to support your growth journey.

Don’t let financing constraints hold your business back. Contact New Bridge Merchant Capital today at 844-228-0593 for a personalized consultation. Let’s work together to turn your business aspirations into reality and contribute to New Jersey’s thriving industrial future.

Fuel your growth with New Bridge Merchant Capital – your partner in New Jersey’s industrial success story.

Financing Your Path to Success: A Comprehensive Guide to NC Small Business Loans

Financing Your Path to Success: A Comprehensive Guide to NC Small Business Loans

North Carolina’s dynamic business landscape offers fertile ground for small businesses to thrive. Understanding the financial tools available, such as Merchant Cash Advances, business lines of credit, term loans, collateralized finance, and reverse consolidation loans, is crucial for any entrepreneur looking to navigate the path to success. New Bridge Merchant Capital provides a range of these financial solutions, tailored to meet the diverse needs of North Carolina’s small businesses.

Merchant Cash Advances: Quick Access to Capital

Merchant Cash Advances (MCAs) offer a swift and flexible financing option for businesses in need of immediate funding. Especially suitable for enterprises with high credit card sales, MCAs provide funds based on future sales projections, allowing businesses to maintain cash flow during fluctuating sales periods.

Business Lines of Credit: Sustaining Cash Flow

A business line of credit provides a cushion for businesses to draw upon as needed, making it a versatile tool for managing cash flow fluctuations and unexpected expenses. This flexible financial solution allows businesses to adapt quickly to market changes and seize growth opportunities as they arise.

Term Loans: Funding Long-term Goals

Term loans are ideal for businesses planning significant investments like equipment purchases or expansions. These loans provide a lump sum of cash upfront, with a fixed repayment schedule, offering a structured approach to financing large-scale business endeavors.

Collateralized Finance: Leveraging Assets for Growth

Collateralized finance involves securing a loan against business assets, providing an avenue for businesses that might not qualify for unsecured loans. By leveraging assets, businesses can often access larger loan amounts, potentially at more favorable interest rates.

Reverse Consolidation Loans: Streamlining Debt

For businesses juggling multiple debts, reverse consolidation loans offer a strategic solution. By consolidating existing debts into a single manageable payment, businesses can simplify their financial management, focusing more on growth and less on debt.

The Application Process: Partnering with Experts

Applying for small business loans requires a comprehensive understanding of your financial situation and business objectives. Companies like New Bridge Merchant Capital assist businesses in preparing detailed financial statements and robust business plans to ensure a smooth application process and improve the chances of loan approval.

Understanding Interest Rates and Repayment Terms

Interest rates and repayment terms vary greatly among different financial products. It’s crucial to understand the total cost of borrowing, including any fees, to make an informed decision. Businesses should consider not only the immediate benefits but also the long-term impact on their finances.

The Impact of Credit History on Loan Approval

A strong credit history can significantly improve the chances of loan approval in NC. Businesses should strive to maintain a good credit score and rectify any issues before applying. However, options like MCAs provide alternatives for those with less-than-ideal credit.

Government Programs and Resources

NC businesses can also explore government-backed loans and resources, such as those offered by the Small Business Administration (SBA). These programs often have favorable terms and can be an excellent source of funding for qualifying businesses.

FAQs About NC Small Business Loans

  1. How do MCAs work for seasonal businesses? MCAs are particularly beneficial for seasonal businesses as the repayment is aligned with the business’s sales volume, offering flexibility during off-peak seasons.
  2. What should businesses consider when choosing between a line of credit and a term loan? The choice depends on the business’s financial needs. A line of credit offers flexibility for ongoing expenses, while a term loan is better suited for one-time, significant investments.
  3. Can businesses with limited assets obtain collateralized loans? While collateralized loans typically require assets, there are various financing options available for asset-light businesses, including unsecured loans and MCAs.
  4. How do reverse consolidation loans improve financial health? By consolidating multiple debts into one, reverse consolidation loans simplify debt management, potentially lower interest rates, and streamline monthly payments.

Conclusion

Understanding and utilizing the right financial tools is essential for the growth and sustainability of small businesses in North Carolina. From Merchant Cash Advances to term loans, there are numerous options available to suit different business needs and goals. By exploring these options and seeking expert guidance from companies like New Bridge Merchant Capital, entrepreneurs can successfully finance their path to success. Contact us today.

What Is a Reverse Consolidation Loan?

What Is a Reverse Consolidation Loan?

At some stage along your company’s growth trajectory, you’ll likely need access to fast debt financing solutions if you expect to continue scaling while covering unexpected shortfalls. However, the trouble with small business financing is that the approval process can be a challenge for newer companies and business owners with unestablished or challenged credit.

Upstarts that just launched typically lack the seasonal requirements for a business loan, while most conventional business lenders will demand a spotless credit profile and careful analysis of your company’s balance sheets and performance. As a solution, an ever-increasing supply of business owners has been turning to merchant cash advance (MCA) funding as a tool for gaining quick access to the working capital needed can keep their operations running uninterruptedly.

While a merchant cash advance can be an expedient path to funding for newer businesses and companies with spotty credit profiles, this funding option isn’t without setbacks. Payments are often withdrawn daily, and an organization can quickly find itself in a toxic debt cycle if its cash flow isn’t sufficient enough to cover daily operating expenses.

It’s not uncommon for a business to juggle several debt obligations simultaneously. If this is your situation, you’re hardly alone. Countless companies have taken out multiple MCAs to only find themselves stretched. While merchant cash advances can be a great way to access near-instant funds, you might need an effective solution for consolidating and repaying them at a lower cost.

Depending on your situation, you could be approved for multiple business loan products that can be used to consolidate and pay off your existing merchant cash advance loans. Reverse consolidation funding, however, isn’t the most straightforward option for combining and paying off your MCAs. This is why it’s worth discussing how they work.

Whether you’ve already used merchant capital advances to fund your business or are considering using them in the future, understanding how the reverse consolidation lending platform functions and how it can benefit your business is vital. In this guide, we’ll closely examine how merchant capital advances work and how reverse consolidation loans help manage them. By the end, you should be able to make an informed decision about whether or not reverse consolidation funding is right for your business.

What are merchant capital advances?

What are merchant capital advances?

Merchant capital advances, or MCAs, are a business financing solution that grants businesses short-term working capital to make payroll, finance debt payments, and cover other day-to-day operating expenses. Businesses leverage merchant cash advances as short-term means of increasing their working capital.

Since smaller companies have more trouble accessing other types of business financing, MCAs are more popular among small to medium-sized businesses than they are in larger, enterprise-level organizations. As such, they can be an excellent option for any organization that cannot access other business finance products.

MCAs serve as an advance against your future sales. When you apply for this type of financing, the creditor will likely need your last several months of cashflows before approving the merchant capital advance. After looking at your earnings history, the lender will agree to advance your credit on the basis of its best estimate of your future sales.

MCA loan terms range from anywhere between 2 and 24 months, with the typical term length being 12 months. The party issuing the advance usually collects the payments by debiting the merchant’s account revenue using an automatic clearing house ACH to route payments back to the creditor.

What is reverse consolidation funding?

As mentioned, if you’ve taken out merchant cash advances in the past, there is more than one way to consolidate and pay them back. Depending on your circumstances, you could use factoring of accounts receivables, alternative cash advanced consolidation, and commercial real estate debt consolidation.

So, what distinguishes reverse consolidation from the funding options above? To begin with, reverser consolidation financiers create these loans in exchange for assuming your weekly cash merchant payments. The reverse consolidation option gives businesses additional time to repay their obligations by extending the repayment terms.

A reverse consolidation is a loan granted specifically for the purposes of making daily or weekly payments on other existing merchant cash advances more affordable. Once you sign on to reverse consolidation funding, the creditor issues more debt payable over a period of time longer than those established in your existing MCAs. This approach often helps businesses avoid imminent default and pay back the multiple MCAs over a term more extended than the one originally scheduled.

While your business might receive additional cash to pay its current MCA obligations, the reverse consolidation funding doesn’t reduce the total amount borrowed. You’re still obligated to pay the MCA as originally agreed. The reverse consolidation funds are, in some respects, like an additional MCA that’s used to simplify the payments to your existing MCA creditors.

How does a reverse consolidation work?

The main purpose of any reverse consolidation loan is to extend the repayment periods on your current MCAs and make repayment easier to manage. Reverse consolidation is a popular solution for seasonal businesses that must cover their expenses during times of low cash flow or organizations experiencing an unforeseen shortfall attributable to circumstances outside their control.

Since severe weather and unanticipated geopolitical events that can trigger an economic shortfall are ostensibly on the rise, more business owners have discovered they need fast working capital lending solutions to cover their everyday operating expenses.

It’s worth reiterating that reverse consolidation lenders don’t issue in one lump sum, consolidating all your existing MCAs into a single payment under a new loan. Instead, a business will take out a reverse consolidation loan to make the repayment schedule more favorable by reducing repayment intervals and extending the overall time you have to repay.

It might seem counter-intuitive, but reverse consolidation loans do not immediately relieve you of your existing MCA obligations. Reverse reconsolidating funding can, however, help businesses improve their MCA payment management to reduce their outstanding MCA balances faster. Many business owners find that making payments to the reverse consolidation lender is easier than juggling multiple MCA payments at once.

Business Line of Credit

How does reverse consolidation differ from standard consolidation?

While a standard consolidation loan will pay off all your existing loans at once and combine them into one payment, a reverse consolidation does not pay off your loans to complete the MCA consolidation process. Standard consolidation loans typically refinance all of a business’s debts at once, combining those loans into a single payment under one loan product with a new repayment schedule.

In comparison, reverse consolidation loans sustain your current MCA repayment plan while the funds from the consolidation lender cover those payments for your MCAs. The terms and repayment processes of consolidation loans can be confusing to some, especially since it entails two third-party lenders communicating back and forth with each other.

Reverse consolidation loans are also considered high risk for creditors. From a lending perspective, there is nothing preventing you from taking on more debt, making it difficult for your business to repay the reconsolidating lender.

Likewise, you might find that reverse consolidation loans don’t work for your purposes because you’re not reducing debt in the immediate term and you plan on borrowing again. A longer repayment term on your MCAs could impact your debt-to-income ratio and limit your future borrowing capabilities.

In sum, a reverse consolidation loan gives you the money to pay back your existing MCAs in a new loan. You repay this balance over time, while a standard or “regular” consolidation loan gives you the money to pay them back all at once.

What are the benefits of reverse consolidation?

Reverse consolidation can benefit any business that is struggling to manage the payments to its existing MCA creditors. Here are a few more ways a reverse consolidation benefits companies like yours:

Fewer weekly payments

Reverse consolidation lowers and extends the repayment periods of your MCA obligations after your reverse consolidation lender takes over the debt and starts issuing payments.

Frees up additional funds

Paying back multiple MCAs every week -in some cases, every day- can get complicated to a point where it starts to affect profits. Reverse consolidation is also an effective way to reduce your incoming cash flow. Reverse consolidation lenders help businesses free up additional working capital. It lightens your monthly MCA obligations and restructures your multiple payments into one. You’ll remit this sum to the reverse consolidation creditor, making it easier to access cash on hand.

A reliable short-term funding option

While it’s easy to accumulate multiple MCA loans, businesses that fall into this cycle can find it difficult to remain profitable. They’ll also quickly discover that if they ever default on their existing obligations, it will be a challenge to access low-cost lending solutions that can help drive growth and keep operating costs low. Reverse consolidation loans give businesses a chance to access fast capital when they require it most. At the same time, the solution helps businesses improve their future odds of finding more favorable credit.

Need a reverse consolidation business loan?

Merchant cash advances benefit any small to medium-sized business that requires access to fast working capital solutions. However, issuing payments to multiple MCA creditors carries a few unique obstacles that can drain your bottom line. If you’re managing multiple MCA debts now or plan to do so in the future, take action and start looking into reverse consolidation loans at the forefront.

For more on how our reverse consolidation business loan products can extend your MCA loan terms and reduce your payments, connect with New Bridge Merchant Capital business lending associate today.

Get started online now. Or, to speak with a senior lending specialist over the phone, dial us at 844-228-0493.