Business cash advance – Empowering businesses everywhere
By: Churchgate | Posted: 26th August 2007
A business may come to require funds for a variety of reasons. Sometimes, the need is of a critical nature where the survival of the business is dependant on the availability of quick funds to tide over a bad financial patch in its operations. Whatever be the case, a business cash advance can be a real lifesaver under such circumstances.
It is rightly observed that a business cash advance can help a small or growing business like few things else. With the rising number of small business entrepreneurs everywhere, the popularity of business cash advance is also on the rise. It is difficult to estimate how many small businesses have benefited from a business cash advance in the last few years.
What one should clearly understand before delving deeper is that a business cash advance is not a loan. It is a cash advance paid against the merchant account receipts of the business, such as VISA or Master card transactions. The core process is simple. Merchant lenders purchase a predetermined number of VISA or Master Card sales receipts and provide business cash advance to the sellers in lieu of those receipts.
It clearly follows from the above that in order to qualify for receiving a business cash advance, a business must accept credit cards as a mode of payment. Other prerequisites include meeting a specific threshold amount in monthly processing, the value of which varies from lender to lender; being in the business for a specific number of years (also determined by the lender); being able to provide credit card statements and bank statements for past months, and so on. Thanks to the recent streamlining of the approval process, once these prerequisites are met, it takes little more than a few days to receive the business cash advance requested for.
Apart from the fast approval process, a business cash advance also offers a host of advantages to a business. The most significant of these is the way in which the advance is repaid. There are no fixed payment schedules for a business cash advance. The repayment takes place automatically when the merchant has a credit card sale.
Moreover, most modern businesses today, equipped with merchant account facilities, sell future credit card receivables at a discounted price to the cash advance business companies for acquiring a collateral or guarantor free cash advance. This saves them from the personal liability of paying off the advance. It is quite similar to factoring invoice, except that in this case the credit card receivables are factored rather than the business-to-business invoices.
These are the reasons that make a business cash advance a better alternative to working capital loans. Unlike working capital loans, the borrowers are saved from committing themselves to repay according to a fixed payment schedule. If the borrower fails to repay the working capital loan, it might affect his credit score and he also stands the chance of losing his collateral. In a business cash advance scheme and the payments are settled against the borrower’s monthly credit card sales receipts. As such, most businesses generally do not feel the pinch.
In recent years, business cash advance has gained in popularity by leaps and bounds. More and more are waking up to the many possibilities of this fantastic finance option. They are becoming increasingly aware of the potential of a business cash advance to help take their businesses to the next level of success and prosperity.
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Tags: small businesses, popularity, merchant account, few days, lifesaver, business entrepreneurs, lenders, receipts, prerequisites, bank statements, credit card statements, payment schedules, threshold, master card, core process, business cash advance, card transactions, fast approval process