Business Cash Advance – The Easy Way to Finance Your Business
By Ray Smith
Running your own business is always a challenging job and the challenge becomes even more difficult when there is a fund crisis. Every business, small or big has experienced this situation where you need immediate financing to support your daily business activities and you are running short on cash. So what are the solutions?
While effective working capital management can reduce the occurrence of such situations, it is more than likely that businesses will still have need for funds, may it be to meet the recurring expenses, buy capital equipments or to expand the existing business.
Business owners has traditionally being dependent on business loans to meet such fund requirements, however, business loans are probably the worst type of liabilities that any entrepreneur would like to shoulder. They would require a collateral, a high rate of interest and fixed payment terms – business owners often risk losing their assets that they put as collateral in case they fail to make timely payments. With all these issues making business loans a negative option for entrepreneurs sets them on a hunt for a better finance option. Business cash advance is just that!
Business cash advance is one of the most popular financing methods for businesses. Cash advance providers would buy a predetermined number of Visa and Master card receipts from business owners and provide them with business cash advance in lieu of those receipts. The amount that the seller receives is not a loan and it is a cash advance paid against the Master and Visa card receipts and is paid back through the merchant account. The borrower need not repay the amount personally.
Unsecured business cash advances are available and the business owner would not require any collateral to get an unsecured cash advance. Also the borrower is not personally liable to repay the business cash advance. The business owner can sell his future credit card receipts at a discounted rate to avail a business cash advance. This is very much similar to Factoring, except for the fact that in factoring business-to-business invoices are discounted where as in this case your credit card receivables are factored.
There are no fixed payment schedules for a business cash advance and only the credit card sales receipts are used for repayment of a business cash advance. All other payments received through cash, check or other credit cards are left with the borrower. This ensures that he has sufficient funds to run his business while the cash advance also gets repaid through the Visa and Master card receipts.
Not only is Business cash advance an easier finance solution from repayment perspective but also it is easier to get. The general criteria required to qualify for a business cash advance are:
- The business must accept Visa or Master Card as a mode of payment
- The business must process a payment of $1500 or more in a month
- The business should have been there for at least 2 years.
- Credit card statement and bank statements for 3 month for seasonal business and 12 months statement for non-seasonal business should be available.
Most business cash advance companies would have similar conditions probably with some modifications here and there. These makes it easy for any business that accepts payments through credit cards to qualify for a business cash advance.
With this easy to get and easy to repay options, business cash advance has been the finance of choice for most business owners and especially small business owners are taking the maximum benefit of from business cash advance. If you are a small business owner, act now and get a business cash advance to take your business to the next level.
This article is written by Ray Smith, a marketing expert with years of experience in different industries and specialized knowledge on branding and Internet marketing.
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Business Cash Advances and Credit Card Processing Strategies
By Stephen Bush
We are highlighting ten key difficulties to avoid when seeking business cash advances and working capital using credit card processing. It is especially important for business owners to realize that it is not necessary to accept any of the ten credit card factoring problems.
Credit card processing and small business loan strategies are closely connected in many ways. Business owners should not overlook the substantial working capital benefits which will accrue to their business by effectively coordinating credit card factoring and processing. If the ten most common business cash advance problems can be avoided, the total business benefits will be maximized.
Even thriving small businesses frequently need more working capital than they can borrow from a bank. One of the most important commercial financing needs for any business is ensuring that short-term cash requirements are successfully met. This is frequently a difficult task.
The use of a viable business cash advance strategy has become an increasingly important business finance tool for many businesses faced with a potential short-term cash shortfall. There are a number of common problems (noted below) to anticipate and avoid when businesses use credit card processing to acquire working capital advances.
Most merchants have documented credit card processing activity and sales volume. Since up to $300,000 and more can typically be obtained using a business cash advance based on future sales, documentation of processing activity is a valuable financial asset.
Businesses should realize that there are several recurring problems that should be anticipated prior to using this strategy for working capital business cash advances. Ten common credit card receivables problems that business owners should avoid when employing this strategy are highlighted below.
First, many lenders will attempt to charge closing costs. Business owners should realize that this is an unnecessary transaction cost for business cash advances when dealing with a truly reputable provider of working capital financing based on credit card factoring.
Second, many lenders for these services also charge up-front fees. With the best programs there are not likely to be any up-front fees, and this is a transaction cost that can and should be avoided.
Third, many programs for business cash advances have collateral requirements. For business owners seeking credit card financing, this is an unnecessary requirement and should be avoided.
Fourth, some lenders will require financial statements and tax returns for all business cash advances. Such additional documentation requirements should only be necessary for larger working capital advances.
Fifth, monthly fixed payments to repay merchant cash advances are imposed by some providers. The preferred approach is to avoid such fixed payment requirements.
Sixth, some providers impose a fixed term for repayment. This requirement to pay off the business cash advance over a fixed term should be avoided.
Seventh, many business finance programs require businesses to have at least two years of operating history to qualify for working capital business cash advances. While many business owners can meet such a requirement, a more practical standard for newer businesses is a minimum of one year in business.
Eighth, most providers of business cash advances currently require credit scores of 680 or higher. For many business owners, this can be an insurmountable requirement in the current economic climate. It is feasible to obtain this kind of working capital financing with scores around 500.
Ninth, for merchants needing larger business cash advances, it will be disappointing to learn that many programs are limited to a maximum of $25,000 to $50,000. Providers that are better capitalized for this business finance strategy will be able to accommodate an advance of $300,000 and higher.
Tenth, quite a few programs require up to 24 months of credit card sales of $25,000 or higher. A more practical possibility for business owners will involve a transaction history with six months of $5,000 or more.
It would be unusual for all of the obstacles described above to be relevant for all businesses. Business borrowers are likely to experience several of these problems if they are considering a business cash advance that uses credit card factoring and credit card processing.
Can all ten credit card finance obstacles discussed above be avoided? There are indeed viable credit card receivables programs which avoid all of the problems described. For any business owner considering this approach to working capital financing, it is probably worth repeating that it is not necessary to accept any of these problems in order to obtain business cash advances based on future sales.
Learn about avoiding working capital management mistakes and find out about commercial loans finance strategies – Stephen Bush is a business loans expert => AEX Commercial Funding and Small Business Cash Management
Article Source: http://EzineArticles.com/?expert=Stephen_Bush
Introduction to Business Cash Advance
Welcome to Business Cash Advance dot info
