AdvanceMe: In the Business of Business
A guest article by: Rob Olson of Quantum Merchant Services
On The Benefits of Merchant Cash Advance
Sometimes the most difficult part of running your own business is obtaining capital to maintain and sustain ongoing growth. It is a challenging market and bank lending is scarce. Fortunately, there are options.
Funding can be obtained from Merchant Cash Advance firms via an alternative factoring product. These funding firms can usually provide financing from as low as $1,000 up to $250,000 dollars(sometimes more!). This isn’t structured as a loan but rather the business sells their future Visa/MasterCard receivables for a discounted price. The discounted price is the upfront lump sum the business receives. In essence, it is a cash advance on future sales through your merchant account.
The cash is then repaid by diverting a percentage of each credit card transaction back to the funding firm automatically. That percentage is predetermined in the contract and is commonly referred to as the Daily Capture Rate, Holdback Percentage, or Withhold Rate. Since it’s simply a percentage of sales, the amount contributed towards repayment will depend on the business generated. The faster you generate sales, the faster it’s paid back. The slower you generate them, the longer it will take to pay back. It’s truly a superior financial tool.
When you are running your own establishment it can be tough to anticipate when major opportunities will arise. On the flipside, it’s not easy to predict emergencies or sudden negative events either. Preparation for both is crucial. A Merchant Cash Advance can be that back pocket plan. Excellent credit is not required and yet a large percentage of Merchant Cash Advance recipients have excellent credit anyway. Traditional banks can take months to underwrite a loan, time that may cost you.
Merchant Cash Advances are not only easier to obtain but continue to be a speedy solution for businesses in need of cash. It should be added that collateral is also not required. Make sure you choose a trustworthy funding company and we wish your business all the best.Last modified: February 21, 2013
Sean Murray is the President and Chief Editor of deBanked and the founder of the Broker Fair Conference. Connect with me on LinkedIn or follow me on twitter. You can view all future deBanked events here.