Small Business Owner considering his Flex Funds options.

Flex Funds Advance – everything you need to know

Ask any business owner what their top requirement for success is, and they will tell you: flexible financing. Traditional lending options, like loan and line of credit, have their place but can fail to address the unique needs of certain types of businesses. This is why we created Flex Funds Advance. With a variable repayment and term, our Flex Funds Advance is specifically designed to offer the flexibility required for seasonal businesses.

In this blog post, we’ll explore the concept of Flex Funds Advance, discuss its benefits, and help you determine whether it’s the right lending solution for your business.

Flex Funds Advance…What’s That?

Commonly known as a merchant cash advance, Flex Funds Advance provides small businesses with upfront capital in exchange for a fixed percentage (retrieval rate) of future card sales. You benefit from a variable, daily repayment structure that seamlessly adjusts to your business’s revenue.

The concept is simple. Your payment will depend on the card sales processed through your POS system. Your daily repayment amount will be calculated as a fixed percentage of the card sales processed from the previous day.

When your sales are strong, you pay down faster and when sales are slow, you benefit from smaller payments. Your payment can even be zero if you made no sales that day. That’s the beauty of Flex Funds Advance. It was designed to align with your daily sales and offer flexibility and peace of mind to the types of businesses that need it.

Let’s Look at an Example

Let’s say you decide to take a $20,000 advance. The total payback amount would be $26,000, which includes the fees associated with the advance, and the retrieval rate would be 24%. That means 24% of your daily card sales will be your repayment amount. Flex Funds Advance has a variable repayment and term, but the cost of lending is fixed. There’s no interest charged. Your cost of lending doesn’t go up, regardless of how long it takes you to repay.

For example, if you made $1,000 in sales, your repayment amount for that day would be $240. If your sales amount to $500 the following day, your payment drops to $120. On a day with no sales, your payment is $0.

The Benefits of Flex Funds Advance

Flexibility in Repayment. The flexible repayment structure of Flex Funds Advance is particularly advantageous for small businesses that experience seasonal fluctuations or unpredictable sales patterns. During periods of increased sales, a higher percentage of your card sales go towards repayment, allowing you to settle the advance more rapidly. During slower months, your payments decrease with your sales, taking additional stress off your cash flow.

Swift & Convenient Access to Capital. Another advantage of Flex Funds Advance is the speed at which funds can be obtained. Traditional loan applications often involve a lengthy process, requiring extensive paperwork and collateral requirements. With Flex Funds Advance, as with all our lending products, the application process is streamlined. Approval can be granted within a day, allowing you to get the capital you need, quickly. When you apply for financing with Journey Capital, you fill out one simple application, and we evaluate your business for all three of our lending products so that you have options to choose from.

No Restrictions on Use. With Flex Funds Advance and our range of other loan products, you have the freedom to use the funds in any way you see fit. Whether you need to stock up on inventory, upgrade your equipment, or launch a new marketing campaign, the decision is up to you. This flexibility in spending allows you to make decisions that best serve your growth plans and react quickly to unexpected expenses that may come up.

Is a Flex Funds Advance Right for Your Business?

Before choosing any financing product, it’s important to evaluate if the repayment structure makes sense for your business. For example, businesses with consistent card sales are generally a great fit for Flex Funds Advance. Other things to consider are your preferences as a business owner and risk tolerance. If you prefer a repayment structure that is fixed and predictable, something you can “set it and forget” then our term loan is probably a better fit. We’re here to make business financing as easy and accessible as possible and want to make sure you’re making the best possible choice for your business.

Let’s look at two separate scenarios where a Flex Funds Advance is a good fit and not a good fit:

Sarah’s Bakery (Good Fit = Flex Funds Advance)

Scenario 1: Sarah owns a bakery and faces seasonal variations in sales, especially during the bustling holiday season. As a result, she needs capital upfront to purchase extra ingredients, hire additional staff, and intensify her marketing efforts.

Flex Funds Advance provides Sarah with the perfect solution to navigate her bakery’s increased Holiday demand. With an advance, she can cover upfront expenses without overwhelming her cash flow. As the holiday rush subsides and sales naturally decrease, her payments also decrease, offering her much-needed breathing room.

In this scenario, Flex Funds Advance becomes a powerful tool, empowering Sarah to invest in her bakery’s success while efficiently managing the seasonal demand and fostering long-term growth.

Patrick’s Home Decor (Good Fit = Business Term Loan)

Scenario 2: Patrick owns a charming retail store specializing in handcrafted home decor. He’s been successfully running his business for several years and wants to expand his offerings to reach more customers. Patrick has identified the perfect opportunity to open a second location in a busy shopping district.

A term loan allows Patrick to secure the funds necessary to cover the costs of expanding his business. By opting for a term loan, he can enjoy the advantages of predictability and stability in his repayment structure. With fixed daily or weekly payments over the agreed loan term, Patrick can effectively manage his financial obligations while strategically allocating resources to support the successful launch of his new store.

This scenario shows why small business owners may prefer a term loan for investments that require a large sum of money upfront.

Applying for Financing With Journey Capital

To recap, here are some of the features of Flex Funds Advance that may make it a good fit for your business:

  • No fixed payments or terms, and no specific collateral is required.
  • Aligned to work with your cash flow. Pay off your balance faster when sales are strong, and benefit from smaller payments when business is slow.
  • Use the funds for anything your business needs.

If you’re interested in applying for Flex Funds Advance or exploring other loan options, click here to get started. Applying is 100% risk-free and will not impact your credit score. To be eligible for Journey Capital’s financing programs, your small business should also meet the following minimum criteria:

  • Business must be based in Canada.
  • Must have a business bank account with a Canadian financial institution.
  • Must have a business history of at least six months with you as the business owner.
  • Must make a minimum of $100,000 in annual sales.

Bottom Line

Don’t let seasonality hold you back! Whether you’re looking to buy inventory, invest in new initiatives, or just help managing the natural ups and downs of your business, Flex Funds Advance can provide the necessary support to fuel your business’s success. Want to know more? Get in touch with our Lending Advisors at (855) 704-7458 Monday through Friday from 9 am-6pm ET.