A Business Cash Advance Isn’t Really A Business Loan
There are many routes to secure cash for your business, but not all of them involve a traditional loan. A business cash advance is actually a type of factoring. Factoring is a method whereby a company sells its anticipated credit card receipts to a third party – the factor – at a reduced rate in exchange for cash with which to fund the business quickly.
In today’s working situation it is no surprise that a large number of new businesses are having a very hard time getting traditional business loans through a bank. The banks are very tight-fisted with their financing right now. Luckily business cash advances through factoring agreements are still available and the items need to qualify are much less tough than those located at the local bank.
To attain a business cash advance, typical factoring companies look for a business to have been in business for at least a year and accepting credit cards for at least 6 months. Since repayment of the financing is directly tied to credit and debit card sales, evidence of this income is also necessary.
A piece of these future credit card receipts is agreed upon as the daily repayment capture, easing the financial hardship for the company during a slower period. Unlike a conventional small business loan, the daily capture feature allows business owners to pay back at their own pace instead of being accountable for for fixed monthly payments that could result in the business going out of business.
Because this money is not obtained in a traditional loan, if the merchant fails to meet the requirements of the agreement, for example, using different credit card services to receive payments, they are still held personally accountable for the balance.
However, for a large number of start-up businesses, this method of obtaining funds is still the best. Flexible repayment terms, fast access to needed cash and less cumbersome acquisition of said financing, makes a business cash advance a great choice for many entrepreneurs.
Dating back to early 2008 Daniel Samoohi has assited 1000′s of business owners in finding credible lenders in order to review offers for a business cash advance. By making lenders compete with each other, Daniel also aids businesses in finding great deals for business cash advances.