It’s tough being a small business owner. It can seem like every institution that was designed to help small businesses thrive and become successful end up causing unnecessary hurdles and expenses.
We know this very well in the credit card processing industry. Gravity Payments was founded to address widespread abuse of small businesses by Merchant Services providers with a focus on placing the needs of small businesses above profit.
This principle paved the way for Gravity to offer more products and solutions to our merchants, prioritizing their success and standing up for owners through services like Gravity Capital.
Gravity Capital aims to improve the small business lending experience. This product focuses on providing an opportunity for small business owners who have been underserved by traditional lenders to timely access to capital to improve their business.
Previously, we published “5 things every business owner should know before taking out a loan or funding”– a guide on what to look for in a lender when you’re applying for a small business loan. Let’s stress test Gravity Capital and see how it fares against the metric we told our merchants to look out for.
Determine the principal amount and repayment limits for your business
This one is hard to do but Gravity Capital is here to help. We utilize a consultative approach to our lending. We consistently communicate with our merchants and help them understand their debt limit, monthly repayments, and cash flow position. Often, we might advise our merchants against applying for a loan if we determine their cash position or cash flow wouldn’t support it.
Gravity Capital also allows our merchants to choose the fee and repayment limits that best align with their business goals. Merchants can choose to pay a higher factor rate for a longer repayment, a lower factor rate for a faster repayment, or a more balanced repayment schedule.
Know the entire cost of the loan
When we look at the cost of a loan, we think “well the interest rate isn’t so bad every month, and lender A charges less than lender B, so I’ll go with lender A”. Unfortunately, you won’t know the total cost of your loan unless you create a repayment schedule and factor in all of the loan initiation fees, early repayment fees, and service fees.
We’ve done away with all of that. For Gravity Capital, we don’t have recurring interest. Instead, we have a one-time “factor rate” and a 1.5% admin fee, and that’s it! Our Gravity Capital merchants know the total cost of the loan, have a say in the repayment options, and prepare for them from day one.
Avoid Recurring Interest
Gravity Capital doesn’t have recurring interest. We have a one-time fee with a 1.5% administrative fee. No hidden fees, and no loan origination fees. This way, not only will you know the total cost of your loan and the amount you will have to repay, you can also rest assured that by taking longer to pay back the loan (in case your processing levels are low), you won’t get hit with more interest.
Consider a non-fixed repayment option
One of the main concerns most business owners have is if their revenue covers fixed costs. It could be either traditional fixed costs or fixed obligations like a small business loan repayment. There is usually a tradeoff with small business loans which is upfront cash in exchange to adding yet another fixed cost to your monthly expenses.
Here at Gravity, we decided to remedy this by eliminating the fixed cost aspect of these loans. Instead of fixed monthly payments, we only collect a percentage of our merchants’ daily processing volume. This way, no matter how your business is doing, we get paid at the agreed upon percentage when our merchants get paid. With Gravity Capital, merchants don’t have to worry about servicing a fixed monthly payment. Instead, they can be assured that during the low months or off season months, they will pay back a lower amount and won’t have to worry about cash flow.
Ability to renew a loan during the repayment period
One of the appeals of a line of credit for small businesses is the ability to keep borrowing from a fixed line of credit. For example, if you apply for $40,000 and pay off $10,000, you can borrow the $10,000 again without going through the underwriting process. That these lines of credit often come with high monthly, and adjustable, interest. Small business owners can fall into the same trap that most individuals fall in with high-interest debts. It looks good on paper, but you run the risk of paying as much interest as the amount you borrowed.
With Gravity Capital, you can apply for renewal for the amount you paid off, we still go through our simple and straightforward underwriting process. The only difference is, that there is no monthly interest and you will still only be charged a one-time fee.
Gravity Capital is making small business loans business-friendly, easy to attain, low cost, and our way to continue supporting and investing in our merchants.