Don’t Let High-Interest Debt Haunt Your Business
High-interest debt can feel like a monster lurking in the shadows of your business finances. Merchant cash advances (MCAs) and maxed-out credit cards might have seemed like quick solutions when you needed capital fast, but their costs can quickly spiral out of control. The good news? There are safer, more sustainable financing options that can help you break free from the cycle of expensive debt.
Understanding your alternatives is the first step toward financial stability. Whether you need immediate working capital or you’re preparing for long-term growth with an SBA loan, choosing the right financing product can make all the difference for your business’s future.
The Hidden Costs of High-Interest Financing
When cash flow gets tight, many business owners turn to MCAs or business credit cards to bridge the gap. These options promise fast approval and quick funding, but they come with steep price tags that can trap businesses in a dangerous cycle.
MCAs typically carry factor rates rather than traditional interest rates, making it difficult to understand the true cost of borrowing. What might seem like a reasonable 1.3 factor rate can translate to an APR exceeding 50% or even 100%. Combined with daily or weekly payment schedules that automatically deduct from your revenue, these advances can quickly drain your cash flow.
Credit cards aren’t much better. While they offer convenience and rewards, business credit cards often carry interest rates between 15% and 30%. When you’re carrying a balance month after month, those rates compound quickly, turning what was supposed to be short-term financing into a long-term burden.
The real danger lies in what happens when businesses can’t keep up. Many owners find themselves taking out additional MCAs to cover existing payments, creating a debt stack that becomes increasingly difficult to manage. This cycle not only drains resources that could be invested in growth but can also damage your business credit and limit future financing options.
A Better Path: The Bankroll Revolving Line of Credit
ARF Financial’s Bankroll product offers a smarter alternative to high-interest debt. This revolving line of credit provides the flexibility you need without the punishing costs of MCAs or credit cards.
How Bankroll Works
Bankroll functions similarly to a credit card but with significantly better terms. You receive approval for a credit line up to $1,500,000, and you only pay for what you use. The key difference? Fixed weekly payments and transparent pricing that make it easy to budget and plan.
During your revolving period of up to one year, you have complete control over your borrowing. Need $20,000 for new equipment this month? Draw it down. Have a strong sales period and want to pay extra toward principal? Make an unlimited paydown of $5,000 or more. Every payment you make frees up available credit for future needs.
Key Advantages Over Traditional High-Interest Options
The benefits of Bankroll extend far beyond lower rates. With repayment terms up to 36 months, your fixed weekly payments remain manageable even as your business needs fluctuate. There are no prepayment penalties, so you can pay down or pay off your line whenever your cash flow allows.
Unlike MCAs that calculate payments as a percentage of your daily revenue, Bankroll’s fixed payment structure provides predictability. You know exactly what’s due each week, making it easier to manage cash flow and plan for seasonal variations in your business.
Finance charges accrue weekly on your outstanding balance, and there are no minimum finance charges or maintenance fees. This means during periods when you’re carrying a lower balance, your costs decrease proportionally. Closing points are only charged on the cash you actually take out, not on your total approved amount.
The SBA Loan Dilemma: Why MCAs Can Derail Your Plans
Many business owners dream of securing an SBA loan. These government-backed loans offer some of the best terms available—low interest rates, long repayment periods, and substantial loan amounts perfect for major investments or refinancing existing debt.
But here’s where MCAs become particularly problematic. As of June 1st, 2024, the SBA implemented new rules that prohibit the refinancing of non-bank, short-term debt like MCAs and factoring agreements unless the business can pass a complex financial spread test. This restriction means that if you take out an MCA while waiting for your SBA loan to process, you could jeopardize your entire application.
The reasoning behind this rule is sound—the SBA wants to ensure businesses aren’t overleveraged. However, it creates a challenging situation for business owners who need capital immediately but are also pursuing long-term SBA financing.
If your SBA application is denied or delayed because of an outstanding MCA, you’re stuck. You can’t use the SBA loan to pay off the MCA, and you’re left managing high-interest debt that was supposed to be temporary.
OnRamp: The SBA-Compliant Bridge Solution
This is where ARF Financial’s OnRamp Interest-Only Revolver becomes invaluable. OnRamp was specifically designed to solve the problem of needing capital now while maintaining SBA eligibility.
What Makes OnRamp Different
OnRamp is structured as a true bank loan, which means it’s fully SBA refinance-compliant. When your SBA loan is finally approved, you can use those proceeds to pay off your OnRamp balance without any complications or restrictions.
The product offers loan amounts up to $1.5 million with a remarkably low initial draw requirement—just 25% of your total approval. This means if you’re approved for $100,000, you only need to draw $25,000 initially, keeping your interest costs low while maintaining access to additional capital if needed.
Interest-Only Flexibility
During your first 12 months, OnRamp requires only interest payments. This structure is perfect for businesses waiting on SBA approval because it keeps your monthly obligations minimal while your long-term financing is being processed.
Like Bankroll, OnRamp allows unlimited draws and partial principal paydowns during the revolving period (with a $10,000 minimum). You maintain complete control over your borrowing and can pay off the loan at any time without prepayment penalties or fees.
If your plans change and you need longer-term financing, OnRamp can extend with flexible repayment terms up to 36 months. This gives you the peace of mind that comes with having options, regardless of how your situation evolves.
Choosing the Right Product for Your Situation
Both Bankroll and OnRamp offer powerful alternatives to high-interest debt, but they serve slightly different purposes.
When Bankroll Makes Sense
Choose Bankroll if you need flexible working capital and aren’t currently pursuing SBA financing. It’s ideal for managing seasonal fluctuations, taking advantage of growth opportunities, or consolidating existing high-interest debt. The product works well for businesses that need regular access to capital with the ability to pay down and reborrow as cash flow allows.
Bankroll is also an excellent choice if you’ve been trapped in the MCA cycle and want to break free. The fixed weekly payments and transparent pricing make it easier to budget and plan, while the longer repayment terms reduce the pressure on your cash flow.
When OnRamp Is the Better Choice
If you’re pursuing an SBA loan but need capital right now, OnRamp is your safest option. The SBA-compliant structure ensures you won’t jeopardize your long-term financing while meeting your immediate needs.
OnRamp is particularly valuable for businesses with solid credit (Equifax score of 651 or higher) and at least three years in operation. The interest-only payment structure during the initial period minimizes your obligations while you’re waiting for SBA approval, and the ability to refinance it with SBA proceeds provides a clear exit strategy.
Qualifying for ARF Financial Products
Both Bankroll and OnRamp have straightforward qualification requirements designed to be accessible to established businesses.
For Bankroll, you’ll need:
- A minimum Equifax credit score of 575
- At least 30 days under current ownership and concept
- Minimum monthly sales of $17,000 ($200,000 annually)
- A business in an approved industry
OnRamp has slightly stricter requirements:
- A minimum Equifax credit score of 651
- At least three years in business under current ownership
- Minimum monthly sales of $17,000 ($200,000 annually)
- A business in an approved industry
Both products are available to a wide range of industries beyond restaurants, including retail, healthcare, professional services, and more. The application process is straightforward and can be completed online in about 15 minutes. Most applicants receive approval within 24 to 48 hours, and the application won’t affect your credit score.
Breaking Free from the Debt Cycle
High-interest debt doesn’t have to be a permanent fixture of your business finances. By replacing MCAs and credit card debt with more sustainable financing options like Bankroll or OnRamp, you can reduce your costs, improve cash flow, and position your business for long-term success.
The key is to act strategically. If you’re carrying expensive debt right now, calculate the true cost of that financing and compare it to what you could achieve with a revolving line of credit. The savings can be substantial—money that could be reinvested in inventory, equipment, marketing, or other growth initiatives.
If you’re pursuing an SBA loan, don’t let the temptation of quick MCA funding derail your plans. OnRamp provides the bridge you need while keeping your long-term financing strategy on track.
Take Control of Your Business Financing
The financing decisions you make today will impact your business for years to come. High-interest debt might solve an immediate problem, but it often creates bigger challenges down the road. By choosing products designed with your long-term success in mind, you can break free from the cycle of expensive borrowing and build a more stable financial foundation.
Whether you need the flexibility of Bankroll’s revolving line of credit or the SBA-compliant bridge financing that OnRamp provides, ARF Financial offers solutions that put you in control. Fixed payments, transparent pricing, and the ability to pay down or pay off without penalties mean you’re never trapped by your financing decisions.
Ready to explore safer alternatives to high-interest debt? Visit ARF Financial’s Bankroll page to learn more about revolving lines of credit, or check out the OnRamp Interest-Only Revolver if you’re pursuing SBA financing. Don’t let expensive debt haunt your business any longer—discover financing options that support your growth instead of holding you back.
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