Why A Merchant Cash Advance Isn’t A Normal Business Loan

There are many ways to get working capital for your business, but not all of them involve a bank loan. A merchant cash advance is actually a type of factoring. Factoring is a practice whereby a business sells its anticipated credit card receipts to a third party – the factor – at a reduced price in exchange for working capital with which to fund the business immediately.

In today’s business situation it is no secret that many new businesses are having a very tough time getting approved for normal business loans through a bank. The banks are overly tight-fisted with their capital right now. Luckily business cash advances via factoring agreements are still available and the qualifications are much less stringent than those found at the local bank.

To acquire a business cash advance, most companies need a business to have been in operation for at least a year and accepting credit cards for at least 6 months. Since repayment of the funds is directly tied to credit and debit card receipts, evidence of this income is also required.

A piece of these future credit card sales is agreed upon as the daily repayment capture, easing the financial hardship for the business in a period where things are slow. Unlike a traditional small business loan, the daily capture capability allows business owners to pay back at their own pace instead of being liable for set monthly payments that could result in the business going out of business.

Because this money is not attained in a traditional loan, if the merchant fails to meet the conditions of the agreement, for example, using different credit card services to accept payments, they are still held personally accountable for the amount left over.

However, for a lot of start-up businesses, this type of obtaining funds is still the best. Flexible repayment terms, fast access to needed capital and easier acquisition of said financing, makes a merchant cash advance a reasonable option for many entrepreneurs.

Dating back to early 2008 Daniel Samoohi has assisted thousands of business owners in finding reputable lenders in order to review quotes for a merchant cash advance. By making lenders compete with each other, Daniel helps businesses in finding great deals for merchant cash advance.