What Is Mindbody Capital and How Does It Help Fitness, Wellness, and Beauty Businesses Grow?
This information contained herein does not constitute financial, legal, or other professional advice and is meant to be used solely for informational purposes. It does not take into account your specific circumstances and should not be acted on without full understanding of your current situation, future, and/or objectives by a qualified professional. Mindbody assumes no liability for actions taken in reliance upon the information contained herein.
It has been many months now since Mindbody embarked down the path of Mindbody Capital with a goal of providing our qualified customers with simple, fast, and transparent access to financing to help them manage short-term cash flow needs and make investments into their fitness studios, gyms, salons, spas, and wellness businesses to help them grow.
You will soon start to hear more about Mindbody Capital as we march towards a full launch later this year. In the meantime, we wanted to share a bit more about what Mindbody Capital is and how it differs from other financing options.
What is Mindbody Capital?
Mindbody Capital’s first product is a cash advance, not a loan.
At this point you may be thinking, aren’t cash advances bad? They may make you think of payday loans and predatory lending. But do you have those same thoughts when you hear Square Capital, PayPal Working Capital, or Shopify Capital?
Most small businesses are overlooked or denied financing from traditional financial institutions, so they are looking online or to their own payment providers for help. Enter the cash advance. Just years after Square, Shopify, and PayPal launched cash advances, their customers accepted and invested over $40 billion into their businesses. Mindbody is bringing this same powerful solution to Mindbody customers.
How does a cash advance differ from a loan?
A cash advance is financing based on sales history–not on credit scores or personal data–and is paid back based on a percentage of future sales. This also eliminates much of the bias compared to the current financing industry where women and businesspeople of color are routinely disadvantaged in their access to capital. Financing offers are based on sales history, that’s it.
When accepting a financing offer, the business owner agrees to pay a flat fee for the cash advance that's part of the total repayment amount. While the offers will vary on a case-by-case basis, the fees that Mindbody customers will pay will be in the industry-standard range of 6%-15% of the cash advance. This is called the factor rate.
For example, a $10,000 cash advance with a 10% capital fee, will have a total repayment amount of $10,000 + $1,000 = $11,000.
The offer will include a rate of repayment and an estimated payoff time. A percent of daily payment processing sales will be deducted each day (don’t worry, you will see all those details in the offer). Slow day? Pay less. Big day? Pay more. Want to pay off early? You can do that, too.
- No credit checks
- No collateral needed
- No minimum payments
- No interest, just a simple flat fee
Easy, flexible, and transparent.
Not all cash advances are equal
So why do cash advances have a bad reputation? That bad rap only lives in some corners because, depending on who the cash advance provider is, in exchange for the higher risk that they take on, they charge a higher factor rate (i.e., more than 30%). They may also make you sign a personal guarantee, putting your personal credit at risk.
Why Mindbody Capital is better
Mindbody Capital is different. The cash advances offered through our capital partner are significantly more affordable (6%-15% versus more than 30%) because Mindbody has a strong relationship with you, our customers, and a direct line of sight into your sales performance–this is not the case with an “off-the-street” cash advance provider. As a Mindbody customer, you get a favorable, non-recourse financing product with a low capital fee–an offer that's unique and found nowhere else in the market.
Small businesses across the globe are getting better, easier access to capital through their business management software and payment providers to help them move forward and fuel growth. Mindbody Capital is for the wellness industry and the passionate, hardworking customers we serve.