If A Business Cash Advance Becomes Necessary
Almost all businesses in operation today have a merchant account. This is a means by which your clients come into your business to make a purchase of goods or services and they are able to pay using a credit card. As a business owner, a small fee is charged by the company who handles these transactions for you. The buyers credit card has to be charged and the amount of the purchase made at your place of business, minus the fee, is submitted to your banking institution. This merchant account is a means for you to obtain a business cash advance.
On occasion, particularly when a business is newly established, it becomes necessary to secure a loan for the purpose of expanding inventory or the purchase of additional equipment your company needs to continue in its operation. Your credit options may already be somewhat stretched due to the expenses incurred when opening your business. It may be at this point in time when you find a merchant loan to be the opportune answer to your dilemma.
A merchant loan is one of the easiest and quickest ways to secure cash for your business. The approval rate is very high with this type of loan and funds are released often within a weeks time. These lenders do not ask for financial statements or tax returns. There are no application fees and you do not even have to worry about specific amounts of repayment.
The few requirements that you are asked to provide are no bankruptcies over the last year or so, your rent must be paid in full and up to date if you do not own your own property, and your business has to be up and running for a minimum of sixty days. Based on this, a merchant lender will be willing to give you up to thirty percent of your monthly credit card income. If you were taking in $10,000.00 USD, this would allow you no less than $2,000.00 USD to use toward your purchases.
The entire process may be more easily explained if one were to consider your merchant account as collateral in the amount of credit card receivable money. The lender is guaranteed repayment by the money your business does in credit card sales. A percentage of that amount is paid to the lender instead of a monthly payment.
Although a business cash advance obtained by a merchant loan seems simple and easy, there are also some disadvantages that should be paid attention to. No business, regardless of how profitable it is, is guaranteed long term success. The business market can be fickle. A business that is thriving this year, can fall into bankruptcy next year. As a business owner, you have to be prepared for any possible future downturn and handle your business carefully. All creditors have to be paid in a regular, timely fashion in order for you to establish a good credit rating. When securing a merchant loan, you are putting your business in debt. If you are a new business with a mortgage, and loans to pay for inventory and equipment that you already have, this additional debt may be more load than you can carry. Merchant lenders will take a percentage of your credit card proceeds each month, but on top of that, there is an additional interest charge for the loan itself. Let’s face it. The institution that lends money for nothing has yet to be invented.
Over time you should work to be your own lender. While your business is profitable funds should be set aside for unexpected costs and reinvesting in your business. If you were to pay yourself the same amount of funds that you would disperse to a lender, the amount saved would be staggering.
None of us can predict the future. No matter how cautious we are with our finances, something can come up unexpectedly. If a businessperson has worked diligently to pay their bills on time a number of financial institutions have monies ready to lend at rates that are very reasonable. Merchant loans may be easy, but they can be expensive. Showing yourself to be a financially good credit risk, will enable you to acquire the funds you need with a payment you can easily afford to repay.
Want to apply for a restaurant loan? Just go to Credit For Merchants now and get a quick and easy business cash advance to help you in your restaurant financing.
