Get a quick business cash advance on your future credit card sales
Get the funds you need now!
You may have heard of payday cash advance loans for individuals? Write a check and the cash advance store gives you cash now and deposits your check/debits your account on your next payday? Well, there is a similar product available for the small business owner. If you accept payments from customers’ credit cards and have been in business for at least a year, there are finance companies that will essentially buy you a share of the next year’s credit card sales and give you a lump sum of cash. which you can use. now for any business purpose: inventory purchase, business expansion, opening a new location, advertising, whatever purpose you deem necessary.
There is no credit check. Simply provide your credit card merchant statements for the past few months to demonstrate the volume of business you are doing from credit card sales. Under formulas that can vary somewhat, the finance company will advance you money now and then pay you back by deducting a portion of your future credit card sales for up to one year.
The process is quite simple, the application is only one page long, and you can receive funds within a week or so, directly deposited into your business checking account.
The problem is that you have to switch through who processes your cards to a merchant account set up by the merchant service provider (MSP) that works with that particular financial company. The MSP will automatically withhold a portion of future credit card sales, instead of depositing them into your business checking account, and will forward those withheld funds to the finance company to pay your cash advance.
The product technically and legally is not a loan. Basically, you are now selling your MSP receivables to the finance company for immediate cash.
In addition to repaying the advance amount, of course, the finance company will charge you a fee for their services. Although the fee is not “interest,” as in a loan, the fee is typically around 16-20% of the loan amount. So, for example, they advance you $100,000 and for the next 12 months you pay $10,000 per month for a total payment of $120,000.
20% may sound high, but if your business can generate a lot of additional income by investing the advanced funds in your business, it might be the way to go. If your personal and business credit is not in sterling or if your business is newly established, it may be the only way to obtain the necessary funds. It goes without saying that in today’s economy, obtaining a business loan is a long and difficult process with no guarantee of success.
Talk to your MSP agent who services your merchant account about this product. Check with your accountant and decide if this is a solution that would work for your business.