There are a lot of methods to get cash for your establishment, but, not all of them involve a normal loan. A merchant advance is really a kind of factoring. Credit card factoring is a method wherey a small business sells a portion of its future credit card transactions to a factoring company – the factor – at a cheaper price in exchange for capital with which to fund the business quickly.
In today's working situation, it is no surprise that several new businesses are having a very tough time qualifying normal business loans through a bank. The banks are overly cautious in regards to their funds at the moment. Thankfully, a merchant advance via factoring arrangements are always obtainable and the documents needed are much less stringent than those received at a typical bank.
To be approved for a merchant cash advance, most factoring companies like to see an establishment to have been open for as little as 1 year and transacting credit cards for at least 6 months. Since repayment of the funds is directly tied to credit and debit card sales, evidence of this revenues is also mandatory.
A portion of these future credit card transactions is agreed upon as the daily repayment capture, making simpler the financial hardship for the business owner during a period where things are slow. Contrary to a bank small business loan, the daily capture capability of a merchant advance allows business owners to pay back the funds at a manageable pace instead of being accountable for set monthly payments that will make the business go out of business.
Being that working capital is not attained in a typical loan, if the merchant is unable to meet the stipulations of the agreement, for example, using different merchant accounts to receive payments, they are still held personally liable for the rest of the advance.
Neverheless, for most thriving businesses, this way of attaining funds is very ideal. Flexible repayment terms, speedy access to important funds and simpler acquisition of said financing, makes merchant benefits a great choice for many companies.