There are a number of routes to secure cash for your establishment, but, not all of them involve a standard loan. Business cash advances are really a kind of factoring. Factoring is a method wheree a business sells a piece of its estimated credit card sales to a factoring company – the factor – at a cheaper price in exchange for money with which to fund the business as soon as possible.
In today's working situation, it is no surprise that several new businesses may have a very tough time obtaining normal business loans through a bank. Throughout America banks are very strict with their capital at the moment. Thankfully, business cash advances from factoring arrangements are still obtainable and the qualifications are way less than those approved at a typical bank.
To be approved for a business cash advance, many factoring companies want to see a business to have been open for at least 1 year and using credit cards for at least 6 months. Since repayment of the financing is simply tied to credit and debit card volumes, evidence of this revenues is also mandatory.
A portion of these future credit card transactions is agreed upon as the daily repayment capture, simplifying the financial hardship for the business during a slow period. Unlike a bank small business loan, the daily capture capability of a business cash advance allows business owners to return the funds at a convenient pace instead of being accountable for set monthly payments that will make the business go out of business.
Being that their funds are not obtained in a traditional loan, if the merchant fails to meet the stipulations of the contract, for example, using different merchant accounts to process payments, they can still held personally liable for the amount left over of the advance.
Neverheless, for most thriving businesses, this way of obtaining funds is still great. Flexible repayment terms, rapid access to critical money and less cumbersome acquisition of said financing, makes business cash advances a smart choice for many entrepreneurs.