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Your Key to Financial Stability Amid Multiple MCAs

BY Value Capital Funding

January 12, 2024

Navigating the Course: Restrictions on the Use of Loan Proceeds for FDIC Bank Term Loans

So you’re considering a loan to give your business that much-needed financial push. Great! But hang on a sec. Knowing what you can use that money for is crucial. With FDIC Bank Term Loans, understanding the restrictions on the use of loan proceeds is not just smart—it’s essential.  It’s wise to pay particular attention here -especially if you are trying to do MCA debt refinancing

Clarity on FDIC Bank Term Loans

First off, what even are FDIC Bank Term Loans? Well, they’re loans backed by the Federal Deposit Insurance Corporation, which means they usually come with lower interest rates and better terms. But that sweet deal comes with strings attached. Knowing what you can and cannot use the money for is crucial.

Permissible Uses of Loan Proceeds

Picture this: your business needs an upgrade, maybe a new forklift or a better computer system. Maybe you’re low on inventory. Or perhaps you just need some extra cash for the daily grind of business expenses. FDIC Bank Term Loans can be the hero you didn’t know you needed. From expansion to equipment, the uses are diverse, but they’re not unlimited.

Flexibility in Usage with Value Capital Funding

Sure, FDIC Bank Term Loans are a solid choice, but what if you need a bit more wiggle room? That’s where Value Capital Funding comes in. We offer loans designed to suit your specific business needs, regardless of your industry.

Pay Down Debts

Let’s get real for a second: debt sucks. Whether it’s a mound of unpaid invoices or a crushing MCA debt, owing money can be stressful. That’s why one of the best uses for an FDIC Bank Term Loan is to clear existing and usually more expensive debts. Free yourself and get back to what you love—running your business.  The facts speak for themselves:  around 70% of all loan requests we get, are for either outright MCA debt refinancing, or to refinance another expensive factored loan product (like Bluevine, OnDeck, headway, etc.)

Business Expansion

If you’re looking to take your business to the next level, an FDIC Bank Term Loan might be the steppingstone you need. Use it to open a new location, hire more staff, or ramp up your marketing game. The goal? Increased revenue and a stronger business, after you factor in the interest rate or cost of the money.  Think OPM (other people’s money).  If done correctly, it’s called financial arbitrage:  you use Bank A’s money for say 12% APR, and you grow your business by 1.5x, or 2x.  This is why public companies with tons of cash still borrow money from banks at good terms – so they can use that money to make even higher returns. 

Purchase Equipment or Inventory

Every business has tools of the trade. Maybe for you, it’s a new oven for your bakery or safety gear for your construction crew. Using a loan to invest in equipment or bulk up your inventory can pave the way for operational success.

Working Capital Needs

Not so new, newsflash:  Cash flow is the lifeblood of any business. We’ve all heard this phrase ‘ad nauseum’.  But how?  Sometimes you need a little extra to cover day-to-day expenses, like payroll or utility bills. An FDIC Bank Term Loan can give you that much-needed cushion, keeping the lights on and the gears turning.

Understand Restrictions

But hold up, not so fast. As great as these loans are, they come with limitations. No using them for personal vacations or buying that speedboat you’ve been eyeing. Knowing the rules and sticking to them is the key to a beneficial relationship with your banker/lender.

Avoid Pitfalls

Don’t get caught in the common traps, like using business loan funds for unauthorized personal expenses. It’s a one-way ticket to Trouble Town. Always double-check what’s allowed and what’s not, so you don’t find yourself in hot water.  Also, one of the biggest reasons a loan file is declined by any given bank is by far invalid, repetitive business expenses. 

Grow Your Business with FDIC Bank Term Loans from Value Capital Funding

So, you’re ready to make a move? Don’t sit on the fence. Contact Value Capital Funding today and explore your options. We offer personalized financing solutions that fit like a glove.