Merchant Cash Advance Provide Capital To Expand

By Daniel Marcus Manson

My brother and I quit our jobs a few years ago to start our own home renovation business. We know all too well why they say timing is everything, because just when we were gaining traction, our business was walloped by the recession. People who are losing their jobs don’t have the cash to be putting on that addition, replace their windows or build a new deck.

So what did we do? While the layoffs devastated the real estate market, other renovation companies went under and banks quit lending out money to small businesses, so we couldn’t get a loan to carry us through the tough times. We used a Merchant Cash Advance to raise additional capital and expanded. Besides the fact that we could actually qualify for funds using this method, once we had it, there was no bank account manager breathing down our necks and demanding a say on how we spent it.

In case you don’t release how financing of this nature works, it’s a form of credit card advance. Since our customers frequently pay by Visa or MasterCard and our credit card sales (even during the worst of the slowdown) easily exceeded $2,500 per month, we were able to work with an alternate lender to secure a cash advance based on future credit card transactions. Our repayment is based on a percentage of future credit card sales, so if we did see further slowdowns in bookings, our repayment would have a corresponding dip; as opposed to a traditional loan that keeps its fixed payment amount, regardless of circumstances. We used Rapid Capital Funding, since they specialize in this sort of financing, but there are other lenders in this area. Turnaround was fast, we didn’t have to spend the better part of a day filling out forms, there were no closing fees and even better, we did not have to put up personal collateral to secure a Merchant Cash Advance.

So while our competitors went under, we had the cash available to react to the circumstances and we actually expanded, keeping our reno business, but using the funds from the credit card advance to purchase additional equipment and hire staff for a new division that works with banks to provide maintenance on foreclosed homes. It’s kind of ironic when you think about it; the banks didn’t have the time of day for us when we applied for a business loan, but if we hadn’t raised the capital to expand by way of a Merchant Cash Advance, their foreclosed real estate assets would be depreciating further in value.

About The Author

Ken Walls owns a successful small business that he expanded by using a Merchant Cash Advance. The additional funds, which traditional banks had no interest in loaning him, provided the capital to take advantage of conditions and expand his business at a time when many competitors who weren’t aware of credit card advance options missed their inflexible loan payments and went under.

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How Can A Merchant Cash Advance Help A Smart Business Owner

By David Castro

Merchant cash advances help business owner's open doors for better types of funding opportunities. The business cash advance industry is climbing at a continuous rate. This ever increasing growth is because traditional bank loans are not meeting the demands of small business owners.

Business cash advances are a unique funding method. It's a purchase of future credit card sales, not a loan, so we have to use specific language consistent with purchase of future credit card sales, like payback rate and discount rate instead of commonly used interest rate on bank loans. Merchant cash advances are a lot like factoring but are based on a sale that hasn't happened just yet.

A business cash advance lender gives business owners a sum of cash advance up front. In exchange, the business owner agrees to pay back the principal amount plus the fee, by giving the lender a daily percentage of their visa and master card sales until the payback is completed.

The daily payback percentage won't be higher than 10% of daily gross sales, the daily percentage is based on the monthly credit cards sales volume and the amount of cash advance required. The payback time-frame is structured for a 6-9 months term, but it's not fixed, and there won't be any penalties if it takes longer.
Business owners usually must switch the credit card processor because the advance is paid back automatically as a percentage of each batch's proceeds, but the rates will be the same if not better. Just a small number of merchant cash advance lenders don't require the merchant to change their credit card processors company. Most time this won't be a problem at all since the rates will be matched.

Business cash advances differ a lot from the traditional bank funding programs. In essence a merchant cash advance lender purchases a small percentage of future Master Card and Visa sales, and the business owner pays back this as a daily percentage of such sales.

Obtaining cash from the bank can be difficult for most business owners, but particularly retail businesses, restaurants, store franchisees or seasonal businesses. These merchants mostly use credit card processing, making a merchant cash advance program a great funding opportunity for them.

What are some of the benefits?

The money is available much faster than it is with a bank loan. Unsecured merchant cash advances are specially a great option for retail and restaurant merchants, not only because these types of businesses can hardly be funded by the traditional bank, but also because of the immediate liquidity and simple process.

Many merchant cash advance lenders advertise that the money will be available in as fast as 10 days, and unlike a bank loan that have a fixed interest rate, as the amount due and due date are fixed each month, no matter if your sales drop. Instead, with a merchant cash advance the payback comes from future credit card receivables, not straining your business cash flow.
Fast merchant cash advance programs are cash flow friendly, during seasonally slow periods specially.

Traditional bank loans require a fixed set of payments every month, whether the business has made a sale or not. But if you choose a merchant cash advance, payments are calculated as a percentage of credit card sales, and if the sales are growing, the re-payment could be quicker, but if the business owner experiences some interruption or sales drop in the business, the payments will drop with it.

Another great advantage of a merchant cash advance, is that the business owner won't risk he's personal assets, because there's no collateral required.

David Castro often writes articles about Merchant Cash Advance and Small Business Loans for Merchant Resources International - To Learn more Visit Us at http://www.cashprior.com.

Article Source: http://www.artipot.com

A Merchant Cash Advance Guide

By David Castro

Merchant cash advances are a great way for small business owners get the funding they need, with a fast and simple process, merchants can be funded with up to $500,000 dollars in as little as 10 days.

How merchant cash advances work?

A lender will purchase a small percentage of your future credit card sales, until the payback is completed and will give you upfront the money your business needs. Often times the business owner will be approved even with a less than great credit history record, making a merchant cash advance a top funding choice.

How do the lenders make money?

Funding charges can widely vary, and that's not just from one lender to another, but from one cash advance to another. For example, the payback on a $10,000 cash advance could be as low as $11500 or as high as $14,000 dollars.

Even though there is a fixed payback daily percentage, and because of that, theirs is no fixed monthly payment, you pay as you sell; the payback factor varies depending on your business sales and the amount of money asked for.

If your business is doing well and sales are good, the advance lender collects the money sooner making the payback amount rather high. Since there is no time limit on paying back the loan, the annual rate will decrease as the payments will be extended over time, although the lender typically forecasts a rather short term for payback, it could usually take less than a year.

There are no questions that the merchant cash advance cost for this kind of unsecured funding is going to more expensive than the cost of a traditional loan, but if you understand the advantages of a cash advance and know how hard it would be to qualify for a bank loan, you will find that a merchant cash advance is a great option.

Often, business owners interested in funding programs like this may have a less than perfect or even bad personal credit history. They may have credit history records like past tax issues, a list of delinquencies, collections, liens or even judgments that would be an automatic red flag for a traditional bank loan. Instead, the merchant cash advance industry is here to help businesses that can't qualify for traditional funding methods.

The lender risk:

There is a rather high risk when providing these types of unsecured funding options (hence the higher cost to the business owner for the money), but they use advanced funding models to determine the possible future credit card sales. They also offer the cash advance with fairly short payback terms to help counter the risk.

Although the approval is much easier than it is with most bank loans, few cash advance lenders will lend to new merchants or start-ups without a history of credit card statements. Even less lenders will approve amounts larger than what the business can predict to earn from credit card sales in a year.

The merchant cash advance lender takes all of the risk, but since it is paid out of projected future sales, it is typically a risk worth taking. Seasonal businesses that need cash flow to move them through slow seasons or merchants, who have an unexpected low season, may find a need for a cash advance until business picks up.
Merchant cash advance lenders say that slow businesses are not the only merchants interested in this funding method. Most types of businesses are often ignored by traditional banking institutions.

There are many times when owners of healthy small businesses could use cash flow or working capital to help build their businesses but don't qualify for the traditional bank loans. These include franchise owners who have exhausted their personal savings to purchase their franchise and would like to open another one; merchants who can buy bulk inventory at discount rates or move into a new, more efficient location; expansions; new equipment; or simply the desire to move forward on a great new opportunity.

David Castro often writes articles about Merchant Cash Advance and Small Business Loans for Merchant Resources International - To Learn more Visit Us at http://www.cashprior.com.

Article Source: http://www.artipot.com