subject: Determining How Business Cash Advances Could Could Benefit You [print this page] It's not only a virtually bankrupt business that can end up with cash flow problems. Even one that is highly profitable can sometimes end up in a situation where they need cash urgently to pay creditors and their debtors are simply not paying on time. In a situation like this a business cash advance is the perfect solution.
There are many differences between such an advance and an ordinary bank loan. In the first place the application process is much easier. You can apply online and you don't have to produce financial statements or business plans to qualify. All the company will normally be interested in is the amount of credit card sales you generate every month and how long you have been in business.
An application for a cash loan also has no effect on your credit record. The reason for this is the fact that it's not considered to be a loan, but rather a sale of assets. You are in effect considered to sell part of your future credit card sales to the company in return for a cash advance at the present moment. Your monthly repayment is therefore also based on the amount of these sales.
You will also receive an approval or denial much earlier than is the case with a traditional bank loan. A bank sometimes takes several weeks before they give you a reply. This is because the application has to go through a complex system of checks and balances and your credit worthiness and financial statements have to be checked thoroughly. When applying for a cash loan you can have the approval and in fact the money within a few short days. From a business point of view this is ideal. If your creditors are waiting for payment, another week won't make a huge difference. A month or more could, however, result in your credit rating to be adjusted downward or even canceled.
The approval rate of this type of funding is also significantly higher than that of bank loans. Since your credit worthiness and financial statements don't influence the decision, all that matters is whether you generate sufficient credit card sales or not. As a rule of thumb five thousand USD is the minimum amount of sales to qualify for such an advance.
When you take up a loan from the bank, you have to repay it in fixed monthly installments. This is another area where a cash advance makes much more business sense. Your repayment will be based on the amount of credit card sales you generate in future. A good month will mean a higher repayment. Conversely, a bad month will mean a lower repayment.
A business cash advance need not be used only for the repayment of creditors. You are free to use it to purchase inventory ahead of the peak season. You could also utilize it to buy new machinery which you need to expand your business.
by: Douglas Rivera
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