Best Practices For A Merchant Cash Advance Provider
With the economy teetering on the ropes after the sub prime mortgage debacle, entrepreneurs are finding it harder than ever before to qualify for a normal bank loan. A merchant cash advance may be a ideal answer. A quick approval time, reasonable cash advance amounts of up to $250,000, and a flexible repayment plan are all great points for traveling this alternate path for the working capital your business wants.
However, a entrepreneur would do well to look at more than just the funds they can attain. The North American Merchant Advance Association (NAMAA) has rules of best business practices that they approve of for merchant cash advance providers. If the provider giving you a business cash advance does not follow these guidelines, it is most likely best to look somewhere else. The guidleines are as follows:
-Give clear disclosure of charges – NAMAA doesn’t approve of closing fees as part of the approval process of merchant advances but urges that any of these charges be transparently explained and disclosed. The total payback figure should be fully elaborated upon and hashed out before putting the final touches on the arrangement.
-Give lucid disclosure of recourse – In reality, merchant advances aren’t considered loans; instead they are regarded as a purchase of future credit and debit card receipts. As such, the entrepreneur can be held personally liable for any cash not returned if the merchant opts to violate the agreement.
-Be mindful of a merchant’s business cash flow – A typical agreement involves that the merchant repays a certain percentage of credit and debit card transactions on a daily basis.
-Marketing materials disclosure – All advertising materials should make it clear that the contract is one of factoring, not a loan.
-Keep tabs on your Sales Agents/Brokers – Merchant advance providers should ensure that their sales agents or brokers are righteously representing the product.
-Verified payoff of outstanding Merchant Cash Advance Balances – if a merchant opts to take an additional merchant advance with a new provider the new company should immediately cover the prior remainder rather than leaving it to the small business owner to pay off the remainder.
Dating back to early 2008 Daniel Samoohi has helped 1000′s of business owners find trustworthy lenders in order to review quotes for a merchant cash advance. By making lenders compete with each other, Daniel also helps businesses find great deals for credit card factoring.