Merchant Cash Advance

Businessmen who want more capital funds but cannot obtain cash loans from the banks can get easy cash advances from Business Cash Advance. Also known as account receivables factoring in the banking industry, Merchant Cash Advance converts your future credit card sales or receipts into cash.

Generally, merchant cash advance providers aim retail businesses, restaurants and service companies that have good credit-card sales but cannot qualify for bank loans either because they have a bad credit standing or little or no collateral at all.

At most, cash advance providers charge great amount of interest against the amount of merchant Cash Advance granted to them. According to Leonard Wright, a columnist for American Institute of CPAs, interest rates in Business cash advance are between 60% and 200% APR.

In order to get cash advances for your business, you need to meet certain qualifications and requirements. For the former, generally the qualifications are first, being in the business for at least six months. Second, your business must accept Visa or Master Card credit cards as a mode of payment.

The requirements vary according to the policy of a merchant cash advance provider, however, mostly they require that your business makes credit card sales or receipts between $2,500 and $5,000 per month, depending on the amount of cash advances you would like to avail. Finally, some cash advance providers want to see 4 months worth of credit card sales.

Unlike the traditional financial institutions such as the commercial and rural banks, Business Cash Advance can release Business cash advance in as short as 24- to 48 hour-period. They also do not take into consideration the businessman's credit score and do not require guarantor.

When the business has met all the qualifications and requirements, the next step to make is to find a Merchant Cash Advance provider. There are many financial institutions that offer this type of service to businessmen. You need to know the interest rate and the terms of payment.

Naturally, the payment is done through collecting a fixed percentage from the merchant's or businessman's daily credit card sales until the cash advance payment is completed, which can range from 6 months to 12 months.

One difference between banks and merchants cash advance providers are the date firmly established for payment. With the former, a fixed and firm date is set and it must be followed strictly. In Business Cash Advance provider however, the dates of payment are flexible as well as the payment itself depending on the cash flow of the merchant.

When you have found the right merchant cash advance provider that can provide your business needs, submit all the requirements it asked. After which, the cash advance loan can be wired to your merchant's bank account in one day.

The fourth step is the payment of the business cash advance through the merchant's credit card sales. Re-payment is done automatic from the merchant's credit card receipts, ensuring merchants that there are no late charges and due dates that are common in bank cash loans.

For example, if the daily credit card sales are $100, the Visa or Master Card Company takes their cut from it, which is $1.50. 20% of the amount goes to the payment of merchant cash advance while the rest goes into the merchant's bank account or your bank account if you are the person applying for business cash advance.