PPP Loan Forgiveness Misconceptions

The do's and don'ts of PPP loan forgiveness.

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The covid-19 pandemic hasn’t been easy on anyone, including business owners. According to data released by the government about the Paycheck Protection Program (PPP loan), more than half of the funds were allocated to just 5% of businesses that applied for the aid. 

Additionally, just 28% of the money was provided in amounts less than $150,000. Whether you are a business owner who received a PPP loan or not, you’ve probably contemplated various PPP loan forgiveness misconceptions. If you were denied the loan, you may have applied for bridge loans or alternative funding instead. If you received the loan, you could be concerned about how much of it will actually be forgiven. 

We’ve compiled a list of common myths surrounding the PPP loan so that we can debunk them and clarify the situation. You’ll also find some other funding methods that could help keep your business afloat during these difficult times.

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What is a PPP Loan?

In 2020, Congress introduced the Paycheck Protection Program, which provides forgivable loans aimed to help businesses cover operating expenses and maintain payroll. Small businesses with 500 employees or less were eligible to apply, along with sole proprietorships, independent contractors and the self-employed. 

On January 11, 2021, businesses could apply for a second round of PPP funds. However, only businesses with less than 300 employees are eligible to apply. They must also prove that they’ve experienced a 25% reduction in gross receipts compared to the same period in 2019. 

Debunking PPP Loan Myths

There has been a lot of changes to the program since it first was released, which has led to some widespread confusion about who is eligible and what the loan really offers. 

Let’s review some common myths, so you can know the facts:


  • Need employees to receive: If your business is registered as an S corp or C corp, then yes, you would have to have proof of payroll to receive this type of funding. However, self-employed individuals that are documented as such, or are designated as sole proprietors or independent contractors, are also eligible for aid. 
  • It’s a low-interest loan: The PPP loan comes with strict designations as to what it should be used for. The goal of the program is to make it possible for businesses to retain employees and continue covering payroll. It was not meant to be used as working capital. However, if you’re looking for a way to obtain capital that can be used for any purpose, then consider a small business loan or merchant cash advance.

  • It’s for businesses going bankrupt: Your business does not have to be on the brink of bankruptcy to receive assistance. It simply requires that you show proof that your business has been affected negatively because of the pandemic.

PPP Loan Forgiveness Requirements

According the the SBA, PPP borrowers can have their loan fully forgiven if and only if the funds were used to cover:

  • Payroll costs
  • Mortgage interest
  • Rent and utilities 

Once the loan is funded, the clock for forgiveness is turned on, It began at eight weeks and was later extended to be 24 weeks. If a business fails to adhere to the forgiveness conditions, then the loan will have to be paid back to the bank. Here are the details straight from the SBA.

stack of documents

Loan Forgiveness Misconceptions

Despite the fact that the SBA has outlined its forgiveness conditions, there are still some misconceptions, including:

  • It’s all or nothing: Although it’s optimal for the full loan amount to be forgiven, it doesn’t have to be all or nothing. In fact, it can be reduced in degrees, depending on how you’ve used the funds. If you’ve spent more than 25% of your loan amount on non-payroll expenses, then the maximum forgivable amount will be your payroll costs divided by .75. Additionally, the total forgivable amount is in proportion to your reduction in headcount, or decreased by the total amount you reduced an employee’s wage by if it was more than a 25% reduction.

  • Documentation doesn’t matter: For everything that you use your loan funds to cover, be sure to retain documentation. You’ll have to provide this information to your loan provider to be eligible for forgiveness. If you’re a sole proprietor, then you wouldn’t have used the funds for payroll. You are allowed to use it to replace lost income for up to $100,000 annualized.

  • SBA calls the shots: While the SBA does oversee the program, the funds still come from a lender. As such, each lender may have their own requirements, so it’s important you cover all the bases and ask questions to understand loan forgiveness.

Bridge Loans and Alternative Funding Options

Since many small businesses were denied a PPP loan, and some won’t be eligible for the more recent round, it’s useful to know about other financing options. 

A bridge loan is a short-term loan that can be used until you can find secure and more permanent funding. Bridge loans can provide you with immediate cash flow, but you’ll likely face high interest rates and have to provide a form of collateral (possibly real estate or inventory). 

Furthermore, if you’re a retail business or a business with credit card transactions as sales, then consider a merchant cash advance. A merchant cash advance is not technically considered to be a loan. Instead, you’re selling future sales to a lender like Uplyft Capital today so you can have quick access to cash. Over time, you’ll pay back the sum as a portion of your sales.

Final Words

The Paycheck Protection Program has always been intended to help businesses cover payroll costs and keep their employee head count the same despite the hurdles posed by the pandemic. Yet, many large businesses received the aid. And so, the government created another round of funds that more strictly stipulates its intention for small businesses. 

Even so, many small businesses were unable to receive funding and are still seeking financial aid. Consider alternative funding methods like small business loans, bridge loans and merchant cash advances to achieve relief. 

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Reverse Consolidation: What Is it and How Does It Work?

Here's how a reverse consolidation could work for you.

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At some point or other, your business is likely to rely on a form of debt financing, or borrowing capital. Merchant cash advances provide a quick and easy way to almost immediately receive funds. To help pay back a merchant cash advance, some business owners look to use a reverse consolidation. If you have already used or are considering using a merchant cash advance for business funding, then it’s a good idea to understand what a reverse consolidation is and how it works. 

Let’s jump into it!

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What is a Merchant Cash Advance?

A merchant cash advance, or business cash advance, is a type of business financing method that is given to businesses to increase its working capital. They tend to be used in the short-term and are a great funding method for small and medium sized businesses that are getting started. Small companies tend to face hurdles when attempting to be approved for a loan, so a merchant cash advance can serve as a saving grace. 

A merchant cash advance is typically a loan with a term that ranges between 2-24 months. The most popular term for a merchant cash advance is one year long. The financier then receives repayment for the loan by pulling payments from the business’ account through an automatic clearing house (ACH) or from the merchant account revenue.

What is Reverse Consolidation?

There are various types of consolidations for businesses who have taken out a merchant cash advance. Some of these include: factoring of business’ accounts receivable, alternative cash advance consolidation, and commercial real estate consolidation. But here, we will focus on a reverse consolidation and what it is. 

A reverse consolidation means that a reverse consolidation funder will provide the business with a loan in exchange of taking on the daily or weekly payments incurred from the merchant cash advance. By doing so, the business is granted an extension on their repayment term. So, the business will pay back the reverse consolidation financier a portion of what it was paying the cash advance lender, but now, for a longer amount of time.

person counting cash

How Does Reverse Consolidation Work?

By extending the loan repayment term, a reverse consolidation lender provides a business with more breathing room. This is especially useful if cash flow is tight or credit sales aren’t performing as well as expected. By taking out a reverse consolidation, it can typically lower payments by 40% to 60%. 

This means there’s higher net cash within the business because of the lower payments. It’s also a good way to consolidate multiple cash advances. The easiest way to think of a reverse consolidation on a merchant cash advance is that it turns the loan into a larger loan with a longer repayment period with small repayment amounts. 

Reverse Consolidations Vs. Regular Consolidation

Both reverse consolidation and regular consolidation are used as methods to help pay back a merchant cash advance, but they differ in a major way. 

A reverse consolidation continues to pay back the MCA lender, it’s just with funds from the reverse consolidation lender. On the other hand, a regular consolidation loan will give your business the funds to pay back your existing loans at once. Then, you have a new loan term with the consolidation lender instead of the MCA financier. 

Benefits of Reverse Consolidation

Small businesses that are facing trouble paying back their MCA loans will look to a reverse consolidation lender for assistance. There are several benefits that come along with a reverse consolidation, like:

  • Reduce weekly payments: The reverse consolidation lowers the weekly repayment that a business owes as the reverse consolidation lender takes on the debt to pay back the MCA lender. 
  • More access to cash: If a business has multiple MCAs to pay back on a daily or weekly basis, then it can become strapped for cash. Since the reverse consolidation lender will infuse the funds to pay back MCA lenders, the business is able to have more cash on hand. It will turn the multiple repayments owed into one sum that will then be owed back to the reverse consolidation lender.

  • Bridge for better options: As a business with multiple MCA loans and debt stacking, it could be hard to obtain a traditional loan like a SBA loan. The high interest rates and short repayment terms become hard to keep up with. But, with the reverse consolidation options, businesses have an opportunity to receive more capital funding for the time being until the situation evolves and they can qualify for betting financing options.

Challenges of Reverse Consolidation

While a reverse consolidation may be a necessary and welcomed option, it doesn’t exist without its share of drawbacks. These downsides include: 

  • Not reducing debt in the short-term: Even though a reverse consolidation removes the burden on the business to pay back the MCA loan, it doesn’t reduce debt. In fact, it may end up increasing overall debt.  
  • Loan terms are long: Naturally, the smaller repayments owed at a time will result in a longer loan term. This is important to keep in mind in the event you’ll want to take out more loans in the future.  
  • Owe more money: The aid of the reverse consolidation lender comes at its own price. So, you can end up owing more money than what you had initially sought to borrow.  

The Bottom Line

A merchant cash advance is a really useful tool for many types of businesses. For businesses with bad credit or businesses seeking cash quickly, a merchant cash advance can be the perfect solution. However, some businesses will find it hard to pay back merchant cash advances on a daily or weekly basis depending on their credit card sales. 

If this happens, then it may be worthwhile to consider taking out a reverse consolidation loan, which will make the MCA repayments for you. In turn, you will extend your loan terms and make smaller, but overall more repayments directly back to the reverse consolidation lender.

Looking for a merchant cash advance provider? Look no further! Explore our programs. 

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Denied a PPP Loan? Here’s What You Can Do

A look at various business funding options.

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PPP loans were issued to help keep small businesses afloat during the coronavirus pandemic. As a form of unsecured finance, PPP loans were granted to qualifying businesses to help them continue to pay their employees, amongst other costs.There were strict eligibility requirements, as well as conditions as to what the loan had to be used to cover. 

The Paycheck Protection Program is now on its second round of funding for eligible businesses. However, some business owners may have already been declined a PPP loan. If you applied, but received a denial, you may be wondering why. You may also be looking for alternative forms of business funding. On the upside, there are many other options you have available to your business (keep reading for more on these)! 

We’re here to tell you everything you need to know after being denied a PPP loan. We will share some common funding methods so you can easily assess your alternative business funding options. 

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How to Know if Your PPP Application Was Denied

If your loan was denied, you’ll likely have received notice directly from the lender, rather than the SBA. It’s possible they won’t give a reason for your denial. There are some common reasons for denial, such as: a mistake in the application, your business doesn’t qualify for the loan or you have previously defaulted on a SBA loan. If you received a rejection without reason, you should try to contact the lender directly to find out why. 

Alternatives to the PPP Loan

There are a few other kinds of loans that you can apply for in lieu of receiving a PPP loan. 

The SBA has many other types of loans available for small businesses facing financial hardship and economic uncertainty. Here are a few options: 

  • SBA Express Bridge Loan: If you are a small business that has already established a relationship with an SBA Express Lender, you may be able to access up to $25,000 fast. An SBA Express Bridge Loan is meant to overcome a temporary loss of revenue to then apply for a SBA Economic Injury Disaster Loan. 
  • SBA Debt Relief: Debt relief is granted to business owners who currently hold a SBA 7(a), 504 or Microloan, or those who took out loans from these programs before September 27,2020. The SBA will pay 6 months of principle, interest and fees associated with these loans. 
  • Employee retention tax credit: It’s possible that you can qualify for a refundable payroll tax credit for up to 50% of wages paid to every employee until December 31, 2020. Sole proprietors are eligible too. 
  • Pandemic emergency unemployment assistance: If you are a sole proprietor, independent contractor or self-employed, then you can apply for unemployment for up to 39 weeks.  
woman typing on laptop

Additional Business Funding Options

Whether you’ve been denied a PPP loan or are looking for unsecured financing options for your small business, you have a lot of routes to consider. 

Let’s take a look at some popular business funding options that can provide you access to capital quickly: 

  • Business line of credit: A business line of credit offers you with flexibility to spend when you need to on credit. Much like a personal credit card works, a business line of credit means that you won’t have to apply for a lump sum of capital. Instead, you can borrow on credit up to the limit. Businesses tend to use a line of credit to expand payroll or cover operational expenses, among other reasons. 

  • Online term loans: An online term loan can loan you $5,000-$500,000. The interest rates tend to stand at 7-99% APR. On the upside, the turnaround time is very fast, taking just about a day. However, they have short repayment terms and may require daily or weekly repayment. 
  • Invoice factoring: As another form of unsecured finance (meaning you don’t need to put up collateral), you can leverage invoice factoring. Your future accounts receivable stand in as collateral. In this instance, your credit score is unlikely to impact your ability to use this method. Instead, your past sales and accounts receivable are a better indicator for approval. 
  • Merchant cash advance: Perhaps you applied for a PPP loan or any other kind of traditional loan, but you keep being denied. This could be because your credit score isn’t high enough, or your business doesn’t have enough history. As a solution, you can apply for a merchant cash advance, and receive a quick lump sum of cash fast for your financing needs. 
  • Crowdfunding: If you’re looking for ways to avoid borrowing money and having to pay it back, then consider crowdfunding. Crowdfunding pulls together money from various individuals, but it takes selling power to get buy-in for your idea or product. In exchange, you may provide the donors with product, services or equity for their investment. 
  • Equipment Financing: Unlike the main purpose of the PPP loan (which was to protect employees and cover payroll), you may need money to buy new equipment for your business. IN this case, the unsecured finance method of applying for an equipment loan could be your best bet. Equipment financing offers you a loan to cover the costs of buying new equipment. The new equipment serves as collateral should you default on paying back the loan and interest.  

Business Funding Made Easy

Having the ability to access business funding quickly can greatly impact your success. Although many business owners were denied PPP loans, there are other SBA options to aid business owners facing the negative effects of COVID-19. 

Additionally, alternative sources of unsecured finance like merchant cash advances or online term loans exist to meet the needs of small business owners.  

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Cost effective methods to boost online sales.

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Did you know that there are more than 20 million ecommerce sites

The world of online retail is extremely competitive. As a business owner of an ecommerce website, there are many things, both big and small, that can help you gain a competitive edge and boost your sales.

Depending on where you are in your business cycle, you may need to rely on financing methods like taking out a
short term business loan to fund your efforts. Or, if you have enough cash flow, then you can reinvest into your business to increase profit. 

We will break down 10 useful, tried and true optimization tips to boost your online sales. Then, we will get into various financing methods should you need some quick cash fast.

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10 Optimization Tips to Boost Your Sales

  1. Optimize your site: Website optimization happens in several ways. For starters, it’s been shown that over 30% of website visitors will exit your website if it doesn’t load within 3 seconds. Some estimates even peg that for every 100ms delay in a site loading, 1% of customers will drop off.  This proves how important it is to have a site that loads quickly. While there are different methods to increase site speed, one of the first things to do is to optimize site images to be small enough so they won’t delay loading the page. Beyond optimizing site speed, you’ll want to make sure that your website is responsive. This means that it can be viewed across different screen sizes, from desktops to laptops and tablets to mobile devices. You can accomplish this by testing across different device types like Android and iOs, as well as screen sizes. 

  2. Boost SEO: You’ve probably heard about Search Engine Optimization (SEO) before. Most people have, but many don’t become experts in the field. That being said, it’s good to know some basics. SEO is a ranking system by which search engines like Google notice your site and return it in the results when someone performs a search. It’s based off of an evolving algorithm, which is impacted by keywords and more. To boost your SEO, you can hire SEO or content creation experts, but you can also start with small things like making sure all your website pages have a meta description. You also want to make sure that your content is of high quality and actually represents what your business provides.
  3. Use social media: Whether you have funding or not, social media is a great way to build your brand awareness and communicate with customers. Social media also helps to add to your credibility and allows people to easily refer you to friends through word of mouth advertising and tagging your business pages. It’s recommended to remain active across social media platforms, so a good place to start is with a Facebook Business Page, Instagram Business Account and Twitter for Business.  

  4. Free shipping: Free shipping falls into a choice your business can make within its pricing structure. There’s a psychological factor associated with receiving free shipping. It’s a big part of the appeal for why people are willing to pay for Amazon Prime. Even if the price is baked into the cost of the good or equal to a percentage off, more often than not, people will be more willing to buy from a business that offers free shipping. This can also play as a competitive advantage for your ecommerce site to help beat out your competition. 

  5. Tailor CTAs: A CTA stands for call-to-action, and it’s a direction to a consumer to take a step or action. For example, this would be a button that reads, “Buy Now.” If you can customize your CTAs to speak directly to the person reading it, you can boost your conversion rates. While this doesn’t necessarily mean every single person receives a different CTA, it means that you can group people within categories in the sales funnel. This means that visitors, leads and customers all receive tailored messaging. 

  6. Declutter site navigation: You’ll want to lead your website visitors to take the action you desire, like for them to add an item to cart. To do this, your website design plays a crucial way in the way they navigate the site. One thing to look out for is a cluttered page or navigation menu. Rather than overdoing the site navigation, be sure it’s an easy-to-use way-finding tool. This way, customers will be led to exactly where you’d like them to go. 

  7. Trust data: In today’s business world, data exists at every turn. But, data is only as powerful as what you choose to do with it. Be sure to set up website analytics by using a tool like Google Analytics. You can better understand how visitors get to your site, what they do on the site, and how long they spend on each page. With this type of information, you can glean insights to make the user experience better to convert sales. 

  8. Ask for feedback: One of the most important aspects of business is satisfying your customers! While every business owner knows this, they don’t all spend time listening to their customers. Solicit feedback from your customers via surveys, phone calls, emails or whatever method makes sense for your business. Many businesses will offer incentives like a discount code for their next purchase if a customer fills out a survey. This is a win-win as you boost customer retention, make a sale, and can use the feedback to make the customer experience even better for your prospective clientele. 

  9. Email marketing: Email marketing can start as soon as you have a potential customer’s email, or a lead. Then, you can increase your email marketing efforts by segmenting your audience into their respective place in the sales funnel. According to Hubspot, marketers who segment their audience notice as much as a 760% increase in revenue. Part of this is playing into the tailored CTAs tip from above. You get to speak directly to your audience and offer solutions to their respective needs through segmentation. 

  10. Partnerships: If you’re just getting started or rapidly growing your online presence, consider forming a partnership with a better known brand. With a partnership, you can easily expand your reach and increase brand awareness at a lower cost than other marketing efforts. Both businesses can form a symbiotic relationship. These kinds of partnerships make the most sense when your business offering complements that of another. Consider an athletic clothing company partnering with a gym or an outdoor adventure company, for example.
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Finding Financing for Your Online Business

As an online business owner, you may find yourself in need of quick cash to finance your business costs. While traditional bank loans are an option, many new businesses won’t qualify because of the strict requirements. However, there are alternative forms of funding like taking out a short term business loan to get the capital you need to increase your sales.

What is a Short Term Business Loan?

A short term business loan is a type of loan that supports a temporary business capital need. Many businesses who aren’t approved for lines of credit will look to short term business loans. This attractive funding option tends to have a lower credit limit than a business line of credit, but they also provide businesses with funding fast. 


They get their name from the repayment structure, which tends to be short term. Rather than paying back monthly or yearly, short term loans are often repaid on a daily or weekly term. It’s important to look at the annual percentage rate (APR) which affects how much you’ll owe back on what you borrow. 

Quick Facts: Short Term Loans

  • Loan amount: Most short term loans are for the amounts of $5,000 to $300,000 because they are meant to cover short term needs. 
  • Repayment: Short term loans tend to be paid back in 6 to 18 months. This could be considered a good thing because you won’t carry debt for long, or it could be a downside as you’ll have to secure the money to pay back the loan quickly. 
  • Eligibility: On the upside, the eligibility requirements are much more lenient when it comes to short term loans versus traditional bank loans. This is why it’s such a great option for many new businesses. The approval and funding time is also much more fast than traditional loans. 

Types of Short Term business loans

There are a variety of different types of short term business loans, including:

  • Term loans
  • Invoice financing
  • Customer advances
  • Payday loans
  • Lines of credit
  • Business credit cards 

At Uplyft Capital, our focus is on merchant cash advances, a type of short term business loan that can provide you with approval and funding in less than a day. A merchant cash advance’s repayment structure is based on your business’ credit and debit card sales over a period of time. This means, you borrow money and then pay it back with a percentage of credit and debit card sales. It’s a great source of funding for businesses who need cash fast, have steady sales and are looking for alternatives to traditional loans.

Final Words

Ecommerce businesses have skyrocketed over the years. New ecommerce sites make their way into the digital world on a daily basis. These digital storefronts have a grand opportunity to boost their sales with a variety of approaches and actions. For many, this will require some upfront capital for their short-term needs. That’s where a  short-term business loan like a merchant cash advance can come into handy! 

Once you devise the strategy by which you will grow your online sales, you can estimate your need for capital (if cash flow can’t cover the costs). Then, you have the option to apply for any type of short term business loan you wish to finance your expansion!

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5 Ways to Grow a Profitable Small Business

Want to make more money for your small business—who doesn't?

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There are many ways to boost your bottom line. 

From focusing on maximizing sales to minimizing costs, there are various methods you can try to find what works to fuel your growth the fastest. Depending on your strategy and goals, you’ll require different funding requirements and methods by which you can attain the capital. 

Some business owners may opt for a short term business loan. Short-term business loans are a capital funding method used for a business needs like working capital, buying equipment or expanding. If you’ve been denied business loans because of your credit history and financial status, you need to know that there are ways to find funding through business loans for bad credit. 

Before we jump into the logistics, let’s take a look at some of the most common ways by which small businesses can transform into profitable powerhouses.

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5 Tips to Grow Your Small Business

  1. Retain existing customers: You’ve probably heard this one before, but it costs 5x more to attain a new customer than retain an existing customer. That’s why it’s so important and vital to your business’ growth to take care of the customers who already support you. In action, this means that you will want to invest marketing dollars and strategy toward engaging with customers who have already purchased from you. Whether this is by sending emails about new products or updates, offering incentives and promotions, giving them gifts, building a rewards program or asking for feedback, you can leverage a variety of methods to help satisfy current customers.

  2. Cash flow is king: While funding methods are helpful, you will still be paying a price of carrying interest. One of the best ways to reduce your interest, or the cost of money you borrow, is to borrow less. But, to do so, you’ll have to have a strong cash flow. Some ways to increase cash flow are: set up retainers, shorten your payment terms, or expand payment options to ACH or mobile payments to get paid more quickly.

  3. Create a referral process: Happy customers like to spread the good news about your business. When you are able to satisfy your customers, then they will tell their friends about the good experience. In fact, 83% of people trust recommendations that come from those they know. One of easiest ways to get people to want to refer others to your business is with an incentive or reward for doing so.

  4. Trust your timing: As you grow your business, you’ll need to hire employees. For every employee, there is a cost greater than just their salary to onboard them and bring them up to speed. That’s why it’s crucial that you trust your timing of when you hire new employees. The upfront cost will need to be made possible with either increased production/sales or business funding, like a short-term business loan.

  5. Optimize operating procedures: The ultimate road to efficiency is paved by lowering expenses and boosting profits. One way to increase profits is to try cross-selling and upselling products. At the same time, you should look to reduce expenses by investing in automation tools, clearly outlining processes for efficiency, and consider using part-time contractors over full-time employees until your finances are in good standing. 
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Have Bad Credit? Business Funding Options Still Exist

Options for business funding are plenty. If you have bad credit, then you may need to consider business loans for bad credit or short term business loans. 

  • Alternative lenders: Traditional lenders are institutions like banks. Many small businesses, especially those with bad credits, will be denied loans from banks. One of the next places they can look for financing is to alternative lenders. Alternative lenders have less strict requirements for loan approvals as compared to banks. They generally work by reviewing an application, approving it and supplying funding shortly thereafter. When banks dole out loans, they often ask for collateral in exchange to secure that even if they are not paid back in cash, they will be able to access assets, like real estate or equipment. Alternative lenders often disregard collateral and base their lending decision on the business’ creditworthiness. 

  • Co-signer: A co-signer is another party that accepts partial financial responsibility for any contracts signed. You can increase the odds of receiving a business loan with bad credit when you have the aid of a co-signer.  

  • Credit unions: Credit unions are not-for-profit organizations that look for ways to help their community prosper. That’s why they are likely to provide small loans to local businesses. 

  • Merchant cash advance: At Uplyft Capital, our mission is to provide small business owners with bad credit a clear and simple way to receive quick business funding. By filling out an application with some background information and telling us about your needs, you can be approved in the same day for capital financing. In exchange, you’ll pay back the capital over time through a portion of credit card sales. The amount you pay back can be proportional to you credit card sales, which will protect you in the event of a slow month of sales. 

Final Thoughts

Growing a profitable small business won’t happen overnight. It’s useful to conduct research in your respective industry to figure out customer demand. Based on needs and funding options, you can outline a plan to run your business efficiently. This way, you can satisfy customers while maximizing profits and minimizing your costs.  

The aforementioned strategies are just a few ways that small businesses can boost their bottom line. It could require a short-term business loan, an alternative funding method, or finding business loans for bad credit to make your dreams a reality. 

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Financial Leverage for E-commerce

Learn about the ins-and-outs of financial leverage for your online business.

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It’s estimated that 12-24 million ecommerce sites exist. With each day, new sites are added into the world. As with any type of business, having finances in order is key for growth and survival. Whether your financial leverage comes in a line of credit, loan, merchant cash advance or another form of funding, your ecommerce business will need it to make it. 

Here, we will look at what financial leverage means in business, how it works, and your funding options for running an ecommerce business.

credit cards

What is Financial Leverage?

When it comes to business, leverage can be defined as “using borrowed capital as a funding source” to expand assets. Since you’re borrowing money, or using debt, to finance assets with potential returns, it’s an investment strategy. The hope is that the benefits will eventually outweigh the costs. So, you’ll be able to pay back the debt, plus any interest, and gain profits. 

As with any type of financing, there are both upsides and downsides. The benefits of using financial leverage like a line of credit, for example, include:

  • Increasing available funds 
  • Boost credit 
  • Improve company growth 
  • Help promote potential acquisitions
  • Grow profits 

If your company is considered to be “highly leveraged,” then it means that most of the capital is in the form of debt. That comes with its own sets of risks, and we will get to that shortly.

How Financial Leverage Works

Financial leverage can be translated into a nominal amount by looking at a business’ financial statements. This will help you find out how much of the business is based in debt, or leveraged. 

For starters, the main financial leverage formula to consider is: 

Total Debt + Shareholder’s Equity = Financial Leverage Ratio 

Shareholder’s equity can be calculated by taking the current number of outstanding shares multiplied by the current stock price. This will show you how much of your business is owed to others and not your own. 

By looking at financial statements like a balance sheet, income statement or cash flow statement, you can also learn more about financial leverage with these formulas:

  • Debt-to-assets ratio = total debt/total assets 
  • Debt-to-capital ratio = total debt / (total debt + total equity) 
  • Asset-to-equity ratio = total assets / total equity 
  • Debt-to-equity ratio = total debt / total assets 

In these formulas, if you are running a retail ecommerce business and take out a line of credit, then that amount of credit becomes considered debt. It’s money you’re borrowing to buy assets, or equity. In this example, you may use this line of credit to purchase inventory, and inventory will translate to sales. Inventory is considered a current asset because it can be converted into cash within one year or less, if all goes well!

Risks of Financial Leverage

It’s easy to see from the above example that financial leverage is inherently taking on a risk. If you buy all that inventory on debt and cannot make sales, then you owe money and are not bringing in cash flow. That’s just one type of risk associated with financial leverage. 

Financial leverage will also affect current and future cash flow. You’ll have to consider how much money you owe back on the borrowed principal amount as well as interest owed. Furthermore, your financial projections need to take into account financial leverage. 

Depending on what you’re using the debt to purchase in forms of assets, there’s other risks like market risk, economic risk or the risk of natural disasters. If you use debt to purchase real estate and the values drop or a hurricane wipes out the building, then you’ve lost on your investment.

customer making online purchase

Know Your Options: Funding for Ecommerce

Whether you have brick-and-mortar location(s) or are solely running an online store, the explosion of ecommerce has ushered in the need for ecommerce funding. The good news is that since it’s such a popular business venture, there are many options to provide you with financial leverage. 


  • Bank loans: Bank loans are often one of the first places businesses look to for financing. However, when it comes to bank loans, there are many criteria your business will have to meet to be approved. This could make it somewhat challenging to get a small business loan from a bank if you’re a new business with little financial history, or if you have bad credit, to name a few hurdles. If that’s the case, then your next best bet is to focus on lines of credit. 
  • Business line of credit: If you have incremental business expenses, then a business line of credit could be what you need. A line of credit is a mix between a loan and a credit card which gives you a pre-approved amount of money that you can borrow. You’ll only pay interest on the amount you take. In most cases, a business line of credit will offer you with a bigger borrowing limit at a lower interest rate. 
  • Credit card: Like a personal credit card, a business credit card will lend you money and you’ll be expected to pay your credit card bill each month. In some instances, a business credit card can also serve like a loan where you may qualify for 0% intro APR (borrow without paying interest for a specified time period). As you use your credit card, you’re building your credit score, so it can be a win-win if you are starting up and able to pay your bills. 
  • SBA loan: An SBA loan is guaranteed by the U.S. Small Business Administration. These loans are a great resource for businesses that qualify. But, to qualify, you will have to be somewhat established as the approval is stringent. In this case, an intermediary lender provides your business with the funds, but the SBA backs a certain amount, so that your repayment terms could work out to be better than bank loans. 
  • Inventory financing: For ecommerce businesses undergoing unexpected growth, invoice (purchase order) financing means that a lender will be willing to pay your supplier or manufacturer for you. In return, you pay back the lender, plus interest. This helps ecommerce businesses get inventory or products to their customers sooner than they would otherwise be able to afford to do. It’s beneficial to attract and retain new customers as your business’ brand awareness takes off. 
  • Merchant cash advance: If you expect to receive a steady inflow of credit card transactions in your ecommerce business, a merchant cash advance can be one of the easiest methods for quick financing. You simply fill out an online application and can be approved practically immediately to receive funds. In return, a defined portion of your future credit card sales will be used to pay back the borrowed money.
  • Venture capital: Say your ecommerce business is rapidly expanding and in need of hundreds of thousands or millions of dollars. Venture capital brings together investors that give you money upfront in exchange for equity in your business. Finding investors isn’t an easy path as you’ll have to prove the value of your business through a solid business plan and proof of concept.

Wrap Up: Financial Leverage and Ecommerce

Ecommerce businesses often rely on financial leverage because of the nature of the business. Whether you need a line of credit or quick cash to buy inventory, equipment, pay for warehousing or operational costs, etc., you will take on debt to grow. 

Ecommerce is a quick-paced platform that requires you to provide value consistently to your customer. Since the internet moves so fast, you can set yourself apart by being prepared for whatever is to come. This will mean being able to get cash fast to meet spikes in demand and changing customer spending habits, so financial leverage is a concept you’ll want to know well.

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How to Get Business Funding with Bad Credit

Bad credit? Big problem? Not so much.

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When seeking business funding, there is a list of criteria you’ll have to meet for approval. Depending on the type of funding you want, the requirements will differ. But, what do you do if you have bad credit? The good news is that you can find funding, even with bad credit. We’re going to share some alternative business funding methods with you. Additionally, we’ll get to the bottom of what credit means, why it matters and what makes it good or bad.

What is Small Business Funding?

Small business funding is the process and act of borrowing capital. Capital is provided through business loans or lines of credit from lenders so that small businesses have money to cover their needs. 

Depending on the type of business funding you select, there will be a unique process for approval. The amount of capital you can receive also varies by funding method.

Why Do Small Businesses Need Funding?

Every small business owner has their own set of needs at any given time. When cash flow is running low, access to quick capital can be the answer to many problems a business is likely to face. Some reasons why a small business may seek outside funding include:

  • To hire staff 
  • Pay vendors 
  • Expand opportunities to grow the business or relocate 
  • Purchase or refinance real estate 
  • Add more inventory or buy materials 
  • Prepare for market or seasonal changes 
  • Buy new equipment or repair broken parts 
  • Manage payroll 
  • Reduce gaps in working capital

How to Get Business Funding

To receive small business funding, the process usually includes these steps:

  1. Business owner calculates the amount of capital they want to borrow and lets the lender know
  2. Business owner shares their desired financing option 
  3. Business owner has a plan for how they will spend the capital to grow their business 
  4. Business owner provides potential lender with financial documents like their gross sales and the amount of time they’ve been in business 

The lender will assess if a borrower qualifies to receive funding. Even if a lender does not approve a borrower, they may still make suggestions for other sources of funding. Approval rates vary by the type of product a borrower applies to receive. The likelihood of being approved along with the amount of time the funding process takes can depend on:

  • The approval requirements (as dictated by the lender) 
  • How the lender processes funds (expedited or not) 
  • The specific product the borrower applied for (i.e. line of credit vs. merchant cash advance vs. business loan)

What is Alternative Business Funding?

When small business owners don’t qualify for business loans for any list of reasons, then they can look to alternative business funding options. These provide borrowers with quality and accessible financing methods. 

Alternate funding began in the 2000s because traditional lenders were facing a challenge to finance all small businesses. The economy and small businesses continue to rely on alternative business funding methods because they offer variety, convenience and better terms in specific cases. 

Here’s a list of some types of alternative business funding options available to small business owners:

Alternative business funding is a good solution for any business owner who may have:

  • Bad credit 
  • Low annual sales
  • Tax liens
  • Bankruptcies
  • Limited history in business 

What is Credit and Why Does it Matter?

One of the most common reasons why small business owners get declined for loans is due to bad credit. Credit is the ability to borrow money and pay it back later. Creditors are banks, lenders, merchants and service providers who give money upfront (grant credit) because they trust you’ll be able to pay it back. 

Creditworthiness or your credit refers to a rating that allows creditors to judge your likelihood of paying back the money. In the United States, creditworthiness is based on credit history, or your record of borrowing and paying back money. Independent credit bureaus store these records and share the reports with lenders. 

Your credit report includes information like:

  • How many credit card accounts you have (along with their credit limits and outstanding balances) 
  • If you make your monthly payments on time 
  • How many loans you have taken out and the amount you owe
  • If you’ve had any financial setbacks like filing for bankruptcy or having a mortgage foreclosure

Credit matters in small business funding because it is one of the main criteria by which you are judged for approval. It also matters for when you sign a lease for an apartment or home (can affect the amount of your security deposit), take out insurance (helps determine your rate), open an account for a utility company or even to judge your character when you apply for a job. 

How Do I Get Business Funding with Bad Credit?

If you’re worried that your credit won’t be good enough for a loan, or you’ve already been denied, it’s okay. There are still ways to get business funding with bad credit. 

To be the best prepared for alternate funding, you should:


  • Plan: Have a business plan ready to share with potential lenders. When your business looks organized and there’s a clear plan to grow it, lenders will be more likely to give you money. 
  • Review: Take the time to request your own credit report and look it over. See if there’s anything that is inaccurate. Even if not, take a look at what could be causing it to be so low and try to resolve those issues (i.e. late payments). 
  • Partner: Perhaps it is worth it to bring on a business partner with better credit. That way, they can be the one to fill out applications for traditional lending options. Or, your partner can be a cosigner. 
  • Crowdfunding: Consider using crowdsourcing financing methods like Kickstarter or GoFundMe. These platforms are best for businesses that want to make a product or provide something that the public can rally around. In most cases, people give money upfront to help fund the cost of getting the product made, and in exchange, they receive the product once it’s made. 
  • Merchant Cash Advance: A merchant cash advance is a great option for business owners who need cash fast and won’t make it past a strict approval process. At Uplyft Capital, we can provide borrowers with a lump sum of money very quickly. All you have to do is fill out an application to get started. Instead of credit dictating your creditworthiness, merchant cash advance lenders will look at your business credit card sales monthly. If you have frequent credit card transactions, it could be the best funding method because you’ll pay back the advance by promising a portion of your business’ future credit card sales. 


Business Funding for Your Business

When it’s time to apply for business funding options, outline the criteria by which you’ll be judged. If you clearly don’t qualify according to lenders’ criteria, don’t waste your time trying.

Instead, re-evaluate where you stand financially and look to alternate sources of business funding. There is definitely a way to get the cash you need at any phase in your business cycle.

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SBA Business Loans: Things You Should Know

Applying for a small business loan requires research and work.

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There’s a lot to know about the different types of loans, as well as the alternative types of business funding out there. Many businesses opt for loans backed by the Small Business Administration (SBA). 

We’ll talk about what small business loans are, the various types, interest rates, repayment terms and everything you need to know before you sign any paperwork. 

What is a SBA Loan?

Small-business loans are issued by banks or participating lenders and guaranteed by the SBA. The SBA is able to guarantee percentages of these small business loans as follows:

  • Up to 85% of loans for $150,000 or less
  • 75% of loans that are for more than $150,000

Many small business owners opt for SBA loans because their rates and terms are typically more flexible and lower than other financing methods. That being said, not all small and new businesses can qualify for business loans. Before we jump into what it takes to get a business loan, let’s see what types of SBA loans are available.

Types of SBA Loans

The SBA guarantees loans of different amounts and for different purposes. Under each program, different groups process the loans as follows: 


  • 7(a) loan program: The primary SBA loan is called the 7(a) loan program. These are federally guaranteed loans for up to $5 millions and the funds are meant for: expansion, equipment purchases and working capital. Banks, unions and specialized lenders process SBA 7(a) loans. 

  • 504 loan program: This program also guarantees loans up to $5 million, but the funds are geared towards buying facilities, land and machinery. Private-sector lenders and non-profits fund loans under this program.

  • Microloans: For working capital, starting a business, inventory and equipment, businesses can apply for microloans for up to $50,000. Community-based nonprofit organizations process these.

  • SBA disaster loans: When natural disasters strike, the SBA backed loans of up to $2 million that provide funds to small business owners suffering from emergencies and natural disasters. The SBA processes these loans. The most recent program that falls into this category is the Paycheck Protection Program for those affected by the coronavirus pandemic.



What are the Interest Rates?

Interest rates for SBA loans are determined by participating lenders who set their interest rates based on the prime rate plus a markup rate, which is called a spread. It looks like this for the 7(a) loan program based on loan amounts and the repayment terms. 


  • $25,000 or less: <7 years repayment = 7.50% / >7 years repayment = 8.0%
  • $25,0001-$50,000: <7 years repayment = 6.50% / >7 years repayment = 7.0% 
  • $50,000+: <7 years repayments = 5.50% / >7 years repayment = 6.0%

How Can I Get an SBA Loan?

Receiving approval for a SBA loan begins with an application process. It can be a lengthy process, taking weeks or months before you see funds or rejection. There are very specific criteria you must meet to be able to apply for a SBA loan in the first place. So, if you fall into any category of ineligibility, it’s not even worth applying. 

If you are eligible to apply, then you should prepare the following paperwork that will be needed for the application:

  • Borrower information form 
  • Statement of personal history 
  • Personal income tax returns (prior 3 years)
  • Business tax returns (prior 3 years) 
  • Business certificate or license 
  • Loan application history 
  • Business lease 
  • Personal finance statement

What Do Lenders Care About?

Although the process and application can be lengthy, SBA loans do offer some of the best interest rates and repayment terms when compared to other business loans, and they are guaranteed if a borrowed defaults. That’s why it is a good place to begin. However, such lenders do care about your cash flow and credit history. They will stringently choose businesses that they believe have high creditworthiness and are unlikely to default on the loans. Lenders will look at what’s known as the 5 C’s, namely:

  • Character
  • Capacity
  • Capital
  • Conditions
  • Collateral 

They’ll also want a strong business plan and down payment. As such, some up-and-coming businesses may have a harder time proving this good history. 

This is just one of the reasons why many small businesses can benefit more quickly from merchant cash advances (MCA) over traditional bank loans. A merchant cash advance provides borrowers with a lump sum of money upfront in what can be less than 24 hours turnaround. As repayment, businesses promise a portion of future credit card sales that will be proportionally paid back. In most cases, it’s much easier to apply for and receive a MCA than a business loan.

Things to Know Before Applying

  • Limit how many you apply for: Be sure to find the program that is suited for your needs before applying to all of them in the hopes you will be approved.

  • Understand the cost: Understand that there is a cost of borrowing money from any provider. The cost is the interest rate and it can be fixed or variable. It also often differs based on repayment terms and the amount you borrow, or principal amount. 

  • Shop around: Look at your options for SBA loans, private loans and also alternative funding options. Uplyft’s Marketplace is designed to help you find the right lender. 

  • Understand repayment terms: Repayment terms dictate the agreement between borrower and lender for how the loan is to be repaid. If a borrower fails to adhere to the repayment terms, there can be costly and serious consequences that could cost you more than your business.

  • Choose between a line of credit or business loan (or MCA): Weight business loans versus taking out a line of credit or MCA before signing any paperwork. Businesses don’t all operate in the same way, nor do they require the same type of funding. That’s why it’s important to write down the pros and cons of your options to best assess your own situation.

The Wrap Up

Although the Small Business Administration doesn’t provide loans per se, they do guarantee loans on behalf of small businesses that borrow from participating lenders. Since they are guaranteeing the borrower, the application process is rigorous and requires that small business owners are in good standing to pay back the loans they borrow. 

However, not all small business owners will be approved for SBA loans, nor do they all qualify. Some good alternatives for small business funding include merchant cash advances or lines of credit. Every form of borrowing money comes with its own terms and costs, so it’s best to assess your current business standing to see what option leads you down the safest and most cost effective route.

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The Pros and Cons of Business Funding

Starting a business will lead to having to make countless decisions.

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The first big decision you’ll have to make is how to fund your small business. You may ask yourself, “Should I get funding?” or “Should I seek investment?” No matter how you phrase the question, you’ll essentially be asking how to do it. 

What works best for some isn’t the right choice for others. There are many variables to each funding route you may choose to take. Let’s weigh the pros and cons of some of the most common ways by which you can get business funding. 

Funding Options: Weighing the Pros and Cons

  1. Bootstrapping: When you hear bootstrapping, you probably think that it means using money from your own pocket. While that’s one way to bootstrap a business, there are other ways to do it that are still considered bootstrapping. The actual term means that you finance your company through unconventional methods. One may be the use of existing resources or renting out your home to make extra cash. Another way is to use earned revenue instead of borrowing money. A lot of companies make it successfully by traveling down the bootstrapping route. For example, Patagonia, SPANX and GoPro have all become household names, founded by entrepreneurs who funded their businesses as they grew. 
    • Pros: Without borrowing money, you won’t have to worry about paying it back or paying interest. 
    • Cons: Bootstrapping may not be timely enough. If you have to wait for sales or income from another hustle, then you may lose valuable time that you could have otherwise been spending on the business’ needs with outside funding. 

2. Borrow Money – Formal: One of the most popular options that entrepreneurs use to get their company off the ground (and continue to use throughout its existence) is to borrow money from an institution or government. There are several options to choose from when you borrow money. A few common sources include:

a. Bank loans: You can apply to receive a business loan from a bank. If you don’t know where to begin because there are so many options, try use our Marketplace, which is designed to match you with the loan provider that best suits your current needs. 

  • Pros: You can receive loan amounts that may be larger than funding from another source. 
  • Cons: There are strings attached to loans, and it’s not always easy for new businesses to be approved for loans because they may lack good credit or business history.

b. Merchant cash advances: A merchant cash advance is a way to borrow a lump sum of money quickly. When you get a merchant cash advance, you promise to pay it back with a portion of credit card sales. 

  • Pros: The funding is fast. We mean, really fast. Uplyft Capital can get you business funding within 24 hours through an easy application. You also don’t need to have a good credit history or any collateral. 
  • Cons: MCAs aren’t meant to be a long-term solution.

c. Investors: There are different types of investors. Angel investors are individuals who lend money usually at the inception of a new business idea. They tend to give large sums. Venture capitalists invest in several new businesses on behalf of clients. This makes receiving venture capital a competitive scene. 

  • Pros: It’s a great way to get large amounts of funding and also potentially gain a mentor in the process. 
  • Cons: It’s costly! After all, it’s an investment so they need it to be worthwhile to give up their money. This means they’ll ask for some ownership (equity) in your business. 

3. Borrow Money – Informal: If you don’t want strings attached when you borrow money, you may be in a position to take a loan from friends or family members. You can also consider crowdfunding platforms like Kickstarter. Even when you seek assistance from personal ties, it’s best to prepare a business plan and showcase how you will be able to pay back the money in a set timeframe. 

  • Pros: Since the funding isn’t regulated, there will be more flexibility. You may also feel more motivation to do well so that you can pay back the money more quickly because you care personally about the lender. 
  • Cons: At the same time, borrowing from someone with personal connections could lead to higher levels of stress or could damper your personal relationship. 

Here’s To New Beginnings

Finding the funding source that makes sense for your new business adventure will require research. How you choose your funding method will affect the early days of your business, which lay the foundation for what is yet to come. 

The upside is that you can start with one funding method and always change it up as the business grows. Your needs will change as you grow and scale, too. If you’re worried about being approved for a business loan, look to merchant cash advances. If you have family and friends with disposable income who are willing to lend some cash, you can avoid the competition of finding a venture capitalist. 

Getting started is the first and most necessary step! 

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How to Apply for a Small Business Grant

The best kind of money is free money!

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For any business, a grant is a solid method for funding because you don’t have to give it back. The types of small business grants available are growing in number, which adds to the chances that you will be awarded. 

Here’s everything you need to know about small business grants, including who is eligible, the options available and how you can apply. 


What is a Small Business Grant?

A small business grant is money awarded to help fund small businesses and nonprofits on their path to success. Governments and private organizations offer small business grants. You can consider a grant to be a gift, because it doesn’t have to be paid back. Unlike a loan, a grant requires no collateral, fees or interest. 

Although the money is free, a grant may come with terms attached. The grant-giver may speculate how you can use the funds. For example, a grant may be provided to hire more employees, so if you use the money to buy equipment instead, you’ll have to pay it back. You may also face legal ramifications. 

Who is Eligible for a Small Business Grant?

Eligibility for grants depends on who’s giving them. For example, a government small business grant won’t be provided to cover operational expenses or pay back debt. Government grants are most attainable for nonprofits related to medical research, technology and education. 

However, organizations provide small business grants for:

  • Innovators
  • Rural businesses
  • Green businesses
  • Women-owned businesses
  • Minority-owned businesses 
  • Veterans 
  • Nonprofit organizations

Types of Small Business Grants

As alluded to, grants come from two main sources, namely the government or private organizations. Private organizations like charitable foundations may also offer grants. 


Although it would be helpful to have, there isn’t a centralized database for all grants. Instead, you have to search for specific types of grants based on your needs. But, we’ve compiled a quick list of places to start. 

Government Grants:

  • Grants.gov
  • GrantWatch
  • Small Business Innovation Research Program 

Private Corporation Grants:

  1. FedEx Small Business Grant
  2. Patagonia Corporate Grant Program
  3. Eileen-Fisher Women Owned Business Grant

Foundation Grants:

  1. First Nations Development Institute Grants 
  2. Veteran Small Business Award

How to Apply for a Small Business Grant

Free money is the best funding method, but it doesn’t make it the easiest. Since you don’t have to pay back the grant, organizations do have to be highly selective in who they award the money to. 

For starters, the application process tends to be lengthy (but, let’s face it – it has to be that way). To begin, it’s best to find a grant that specifically meets your needs. Then, you can follow these best practices to boost your chances of winning the money:

  • Before you start the application process, double check the requirements. You have to be honest here. For example, the grant may be designed for women-owned businesses that offer a technological solution to protect the environment. If you’re a women-owned business but that’s not your market, then there’s really no point in going down that path. Instead, spend the energy and time to find the type of grant that is meant for your business. 
  • Diligently read instructions and fill out the application in its entirety. Also, don’t go above and beyond word counts. 
  • If you have any questions or doubts, be sure to get in touch with a grant officer. People are available to help answer your questions. It’s better to be informed than potentially ruin your chances. 
  • You can count on having to provide a business plan. This should include your company’s purpose, how the grant will help achieve success and the ways by which you will adhere to the grants stipulations. 
  • Like with a job interview, it’s best to follow up after submitting your application. By creating a relationship with the grant officer, you can keep an open flow of communication without being overwhelming.

Alternative Funding Methods

Small business grants are highly competitive. Whether they come from the government or organization, it requires that your business fits the requirements perfectly like a puzzle piece. When applying for small business grants, it’s also a good idea to have other funding methods in mind in case you aren’t awarded with the free money or need more. 

For some, a merchant cash advance may be the right fit! A merchant cash advance offers you money upfront in exchange for a portion of future credit card sales. If you experience a slow month of business, then the money you pay back becomes a function of your sales, so it can be less stressful than having a fixed rate on a loan.

The Bottom Line

No one would refuse getting free money to help set their business up for success. For this reason, small business grants are highly competitive and not always the right fit for every small business. But, if you can find a small business grant that aligns with your needs, then it’s worthwhile to take the time to apply meticulously. 

At the same time, you can check out merchant cash advance options. It’s just another useful low risk way to secure business funding quickly.

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