subject: What Is A Business Cash Advance? Is A Business Cash Advance Will It Work For You? [print this page] A business cash advance is a scarcely utilized financial method that gives necessary funding to merchants from their credit card processor. A very little amount of merchants realize that they have this choice and go directly to family or a bank when they need funds to pay for expansions, repairs or upgrades of their stock and equipment. If you are a entrepreneur in need of funds quickly, you should look into factoring as well.
The idea behind factoring is a bit like selling futures. You, as the entrepreneur, agree to sell future credit card receivables at a cheaper price to the factoring company. The funds is received now in exchange for future receivables in the next several months.
These arrangements are usually for the near term, rarely more than 1 year, and are a excellent way for a company with a proven credit card sales track record to get needed money.
Unlike a bank loan, in which the repayment schedule is fixed for the entirety of the loan, a factoring arrangement takes into consideration the fact that in almost every business there are excellent months and bad ones. Your payment is directly tied to your credit card receivables, as a percentage, not a set fee.
If you have decided to pay a ten percent daily capture and you take in $8,000 one month, your payment that month comes out to $800. In following month you may take in 10,000 dollars and pay $1,000. This flexibility is a great thing for a growing company.
Another benefit of a business cash advance is the speed in which the working capital turns up in your possession. While a bank may take several weeks of deliberation and tell you how you use the working capital when and if they give it to you, with a factoring agreement, you will have the cash in about a few working days, and you can apply it to whatever you see fit.
by: Daniel Samoohi.
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