Business Cash Advance Provider Guideline Checklist
With the economy still on the ropes after the sub prime mortgage debacle
, entrepreneurs are finding it more difficult than ever before to qualify for a local bank loan. A business cash advance may be a perfect answer. A speedy turn-around time, reasonable cash advance funding of up to 250,000 dollars, and a flexible repayment schedule are all great points for traveling this new direction for the funding your business needs.However, a merchant would do well to review more than just the funding they can obtain. The North American Merchant Advance Association (NAMAA) has rules of best business practices which they approve of for business cash advance companies. If the provider offering you a business cash advance doesn't follow these guidelines, it is probably best to look elsewhere. The guidleines are as follows:
-Provide transparent disclosure of fees - NAMAA doesn't approve of closing costs as part of the approval process of merchant advances but recommends that any such charges be clearly explained and disclosed. The total payment number should be fully explained and figured out before putting the final touches on the agreement.
-Provide clear disclosure of recourse - In reality, merchant advances aren't considered loans; rather they are regarded as a purchase of future credit and debit card sales. As such, the entrepreneur can be held personally in debt for any funds not repaid if the merchant opts to violate the agreement.
-Be sensitive to a small business owner's business cash flow - A typical arrangement involves that the merchant repays a determined portion of Visa-MasterCard sales on a day to day basis.
-Advertising materials disclosure - All advertising materials should make it clear that the contract is one of factoring, not a loan.
-Stay on top of your Sales Agents/Brokers - Merchant advance lenders should make sure that their sales agents or brokers are appropriately representing the terms.
-Adequate payoff of outstanding Merchant Cash Advance Balances - if a entrepreneur opts to take another merchant advance with a new lender the new lender should immediately pay off the previous balance instead of leaving it to the merchant to cover the remainder.
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