A Merchant Cash Advance is Not Actually a Business Loan

Published: 24th September 2010
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There are a lot of routes to get cash for your business, but not all of them involve a normal loan. A merchant cash advance is actually a form of factoring. Factoring is a method whereby a company sells its future credit card sales to a factoring company - the factor - at a cheaper rate in exchange for cash with which to fund the business as soon as possible.

In today's business climate it is no surprise that a large number of new businesses are having a very difficult time getting normal business loans through a bank. The banks are very tight-fisted with their funds at the moment. Fortunately business cash advances via factoring agreements are still available and the items need to qualify are much less tough than those found at the local bank.

To obtain a business cash advance, many companies require a business to have been in operation for at least a year and processing 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 necessary.

A piece of these future credit card receipts is agreed upon as the daily repayment capture, making simpler the financial burden for the business owner in a slower period. Unlike a conventional small business loan, the daily capture capability allows business owners to pay back at their own pace instead of being responsible for set monthly payments that could end up in the business going out of business.

Because this money is not acquired in a normal loan, if the merchant fails to meet the conditions of the agreement, for example, using different merchant accounts to process payments, they are still held personally liable for the remainder.

However, for many start-up businesses, this form of financing is still optimal. Flexible repayment terms, quick access to necessary capital and less cumbersome acquisition of said financing, makes a merchant cash advance a reasonable choice for many business owners.

< href="http://www.businesscashadvancelenders.org">Advanced Business Cash lenders provide money without necessitating liens or second mortgages against your home or business. It's a fast and simple cash advance system where there is no need for fixed loan amortization. You get to pay your cash advance simply by generating credit card sales.


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