Business owners, who would like more working capital, however cannot get loans from the banking institutions can possibly get easy cash advance through business cash advance. Business cash advance is also called account receivables invoice factoring within the banking industry, Business cash advance converts your potential credit card receipts or sales into cash.
Usually, business cash advance lenders focus retail businesses, repair firms, restaurants that have good credit card sales, however cannot get bank financing either because there is a poor credit history or little if any collateral whatsoever.
For the most part, cash advance lenders charge great interest rates against the sum of business cash advance given to them. Leonard Wright, a columnist for American Institute of CPAs, reported that in business cash advance the interest rates are between 60% and 200% Annual Percentage Rate.
To be able to get a cash advance for business, you have to meet certain requirements and qualifications. For the former, usually the qualifications are first, running the business for at least six months. Second, your business should accept Visa/Master cards like a payment mode.
The requirements differ based on the policy of business cash advance lender, however, usually they require that the business makes credit card sales between $2,500 and $5,000 monthly, with respect to the sum of money advances you want to get. Finally, some cash advance lenders need to see four-month worth of credit card sales.
Unlike the standard banking institutions like the commercial and rural banking institutions, business cash advance can release cash in just 24 hours. Additionally they don’t take into account the business owner’s credit rating and also don’t require guarantor.
Once the business has met all of the requirements and qualifications, the next phase is to locate a cash advance lender. There are lots of business cash advance lenders in the market who provide cash advance to small or medium sized business owners. You should know the rate of interest and also the repayment terms.
The payment is performed through getting a set percentage from business owner’s daily credit card sales until the cash advance payment is fully completed, which could vary from 6 to 12 months.
One distinction between banking institutions and business cash advance lenders is the date firmly established for payment. With banking institutions, a set and firm date is placed and it should be strictly followed. With business cash advance lender however, the dates of payment are flexible along with the payment itself with respect to the cash flow of the business owner.
If you have found the best business cash advance lender that can offer your business requirements, submit all of the needs he requested. Then, the business cash advance can directly transfer into your merchant account in a single day.
The next step is the repayment of business cash advance through credit card sales. In business cash advance the repayment is performed automatically from the sales of credit cards, ensuring business owners that there is no late fee, concealed charges and due dates which are common in bank cash advances.
For instance, in case your daily credit card sales are $150, the credit card issuer takes their cut from this, that is $1.50. Almost 20% of the amount goes to the repayment of business cash advance and the rest goes into the bank account of a business owner.