Learn How Merchant Account Cash Advances Work
October 4, 2008 by Matthew Hunt
Having immediate access to working capital is an important business finance tool that is frequently overlooked. Even the most successful businesses frequently need more cash than they can obtain from a commercial bank.
Merchant Account Cash Advance is a small business funding tool we provide to merchants who need immediate cash funding, but cannot secure financing through banks or traditional lenders.
From working closely with hundreds of Canadian Small Business Owners for over five years now, I have learned and understand that a business’s success is sometimes determined by having an emergency capital plan in place to assist the growth of their business.
Why is Merchant Account Cash Advance a popular funding choice for small business owners?
Merchant Account Cash Advances are popular among small business owners for good reason and have many advantages. The funding process is simple and quick. Most applications are funded within five to seven business days.
THIS FUNDING TOOL IS NOT A LOAN!
It is a cash advance based on your future credit card sales, and provides a real solution to business owners who require extra working capital to grow their businesses efficiently, effectively, and seamlessly. Terms are flexible. Renewals are straight-forward and simple.
So simple, in fact, that nearly 70% of all merchants who choose to exercise this type of funding renew upon completing their first funding cycle.
- A Merchant gets working capital quickly, typically in less than seven business days
- No collateral required
- More funding available over time. During a typical three to five year term of a bank loan, a merchant could obtain around five times more the working capital from a merchant account cash advance company
- No bank hassles. No red tape. Easier approval process. (90% approval rate)
- Should not affect a merchant’s ability to obtain working capital from traditional lenders. This type of funding does not show up on credit reporting because it is not a loan. The cash advance company is purchasing an asset from you-your future credit card sales at a discount.
This is not a “Lender-Borrower” relationship. This is a “Buyer-Seller” relationship.
- It involves automated collection from a merchant’s Debit/Credit Card Processing. It is more like a payroll deduction. The percentage the funding company retrieves does not change. As a result, if a merchant’s sales volume declines, the funding company retrieves less and if a merchant’s sales volume increases, then the funding company retrieves more. Therefore, this type of funding works with a merchant’s cash flow.
- The money can be used for anything the business owner chooses. No business plan or previous tax records are required to be qualified for funding. NO RED TAPE.
What can the funds be used for?
- Additional working capital
- Equipment purchases
- Opening new locations
- Renovating or remodeling your business
- Advertising
- Cash flow needs for established seasonal businesses
- Purchasing additional inventory
- Emergencies
- Buying out your business partner
- Funding payroll
- Paying Back Taxes
- Paying Debt
- Whatever you want!
How do I know if I’ll qualify?
A Merchant Account Cash Advance is very simple and straight-forward. There is no collateral required. The funding is based on your future debit and credit card sales from the previous year to present.
What you will be required to supply to qualify:
- Four months of debit/credit card statements from the previous year (12 months for seasonal businesses)
- Landlord information-must have a 12 month lease or more
You business MUST NOT:
- Generate less then $10,000/month in debit & credit card sales
- Have no more than $175,000 in unresolved liens
- Be behind more then one payment for business rent or business mortgage
Merchant Account Cash Advance FAQ’s
Q: HOW LONG WILL I HAVE TO WAIT TO FIND OUT IF I HAVE BEEN APPROVED FOR MY FUNDING?
A: Once we receive the appropriate paperwork it usually takes 48 hours to get approval and typically takes 5-7 business days to fund the cash advance to your bank account.
Q: HOW MUCH CAN I QUALIFY FOR IN A CASH ADVANCE?
A: Your cash advance is based on your average amount of sales in a month, which is figured out by your average credit card sales from previous merchant account statements. We can fund amounts from $7500-$100,000 per business. We have access to a $500 million portfolio that is available to businesses like yours. The question really is, how much do you want?
Q: HOW DO I REPAY MY BUSINESS FUNDING?
A: The Merchant Account Cash Advancing Company collects a small percentage of each of your debit and credit card transactions until the full terms are fulfilled. Typically the retrieval rate is 20 percent or less of your daily credit and/or debit card sales.
Q: CAN I USE MY CURRENT DEBIT/CREDIT CARD PROCESSING PROVIDER?
A: Yes and no. The Funding Company requires that you use an approved processor who is certified to administer their program. Most processors are approved, but some are not. If you are not using an approved processor then you will be set up with new payment processing services and the funding process will take an additional five business days. However, your new payment processor will match your current processing rates. In some cases, after evaluating your current payment processing statements, we may even be able to reduce your payment processing costs.
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