Most businesses which accept credit cards can obtain a
business cash advance by using their future credit card
processing activity. This strategy is also referred to as
credit card financing and credit card receivables
factoring. However, there are a number of critical business
financing problems to avoid when using this strategy, and a
merchant cash advance is not the only source to consider
for additional working capital.
Business cash advance and credit card processing management
is frequently one of the most overlooked sources of working
capital for a business. This article will provide a concise
and practical introduction to what a business needs to know
about using this business finance strategy and how to
obtain a merchant cash advance.
Businesses should not overlook the substantial working
capital business loan benefits which will accrue to their
business by effectively coordinating merchant cash advance
and credit card processing programs. Improved cash flow and
reduced costs are key results of successful coordination of
these business financing services. Perhaps most
importantly, a business cash advance based on credit card
processing is one of the few viable options for reliably
obtaining short-term commercial financing for many service
and retail businesses.
Before we begin, there are two key points to keep in mind.
First, business cash advance programs can be a source of
confusion and problems, and proper anticipation of these
potential difficulties is essential for a business owner
considering this working capital strategy. Second, business
cash advance programs are often referred to by other names
such as credit card financing, merchant cash advance and
credit card receivables factoring.
Although this is a sound and viable strategy, there are
pitfalls to anticipate and avoid. Here is a suggested
process for reviewing possibilities to improve credit card
processing and simultaneously obtain a business cash
advance.
Realize that the business cash advance strategy is not
readily available until a business has been operational for
at least one year. A further limitation is that the
business must have been using credit cards as a form of
payment by customers. New business owners will nevertheless
be wise to educate themselves about this business finance
strategy in preparation for possible application a few
months down the road.
Determine how much additional working capital your business
needs. In general a business cash advance is typically
possible for amounts varying from $5000 to $300,000 and the
amount will depend on the monthly credit card processing
volume for a business.
Review your monthly credit card volume as well as cash
receipts from your customers during the past six months. It
is not unusual for a business to experience cyclical
variations in their monthly receipts, and these
fluctuations are generally acceptable in calculating the
potential for a business cash advance.
Avoid business finance sites which request that a business
owner submit an online application for a business cash
advance. To illustrate the problems associated with an
online business financing application, we have prepared a
separate business loan report entitled How and Why to Avoid
the Online Business Loan Application Trap.
Talk to an experienced business cash advance advisor. You
should avoid high-pressure representatives that make
unrealistic promises about how quickly the credit card
financing process can be completed. A realistic expectation
is that a merchant cash advance can be finalized in a
period of two to four weeks. A knowledgeable working
capital financing advisor will be able to provide an
initial assessment of potential working capital advance
options based on information referred to above.
Explore additional resources that will facilitate a better
understanding of complex credit card factoring issues. You
should look for sources which will provide relevant
strategies and solutions for any business owner
contemplating a future business cash advance.
Complete an initial business cash advance application once
you are satisfied that you have identified a suitable
advisor and provider for coordinating the credit card
processing and credit card receivables factoring. Please
remember our advice to avoid the online versions for this
step. Faxing or emailing a completed application directly
to the advisor-provider is the preferred method for
submitting initial documentation. Please note that there
should not be any up-front fees or closing costs to obtain
a working capital advance.
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Steve Bush is a small business loans expert - learn how to
avoid mistakes with commercial loans and find out about
business cash management strategies at AEX Commercial
Financing Group =>
http://sabush.org
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