Aug
22
2010
Business Cash Advance – An Easy Method Of Raising Working Capital For Your Company
Author: Daniel SamoohiA Business Cash Advance is becoming progressively more common in society these days. The current economic status and tough credit expectations are huge contributors to the boost in funds advances. It is tough for businesses to get the funds that is necessary with the increasingly strict stipulations for regular business loans. Merchant cash advances are an unconventional way of getting funds for normal business requirements. So how does a business cash advance operate? Let us explain
Business cash advances are a service provided by a funding institution to a small business owner that receives credit cards, most commonly in the retail or restaurant business. The merchant loan financing institution basically advances the small business owner a predetermined sum of money in exchange for a percentage of their future credit card receipts.
For example, let’s look at Jo’s Diner. Jo may not have adequate cash available to pay his employees or to buy new appliances for his kitchen. Say Joe needs 30,000 dollars and he called a Merchant Loan lender for the funds.
The agent would assess Jo’s previous credit card statements and see if he can be approved for the advance. They would figure out an interest rate for the working capital advanced. The rate is typically more expensive than a normal business loan because the advance is typically given to entrepreneurs that do not have the credit or collateral to get cash from a regular bank. If the fee for Jo’s advance is 30 percent then he would be getting the 30,000 dollars and paying the provider 39,000 dollars in future credit card sales.
The agent would get repaid the 9,000 dollars by taking a percentage of the daily credit card receipts the business takes in. Say the part the agent takes is eight percent of daily credit card transactions and the merchant received $10,000 in credit card receipts for the day. The merchant cash advance provider would take $800 (8% of the $10,000). This process would continue until the agent received the entire $39,000. This payment process goes up and down with the cash flow of the business. The percentage will stay the same so if your business has a bad period, you will be paying less. This is a huge selling point for the advance service. Conventional bank loans have a flat payment amount, which could be hard to pay during slow times. A merchant loan has the feature to follow a change in business cash flow.
A business cash advance is a helpful alternative to a business loan. Some may think 9,000 dollars is a expensive fee to pay but the criteria a merchant must meet for a regular loan is becoming more and more tough to get. A business cash advance is a method of obtaining immediate and easy money to meet business working capital needs.
Dating back to early 2008 Daniel Samoohi has aided thousands of business owners in finding trustworthy providers in order to review offers for business cash advance. By making providers compete with each other, Daniel assists businesses in finding great deals for a business cash advance.
