subject: Guidelines To Follow For Business Cash Advance Companies [print this page] With the economy still on the edge after the sub prime home loan crisis, entrepreneurs are finding it tougher than ever before to get approved for a traditional bank loan. A business cash advance may be a perfect solution. A quick turn-around time, viable cash advance amounts of up to $250,000, and a flexible repayment plan are all great points for traveling this different road for the funds your business wants.
Still, a merchant would do well to review more than just the financing they can acquire. The North American Merchant Advance Association (NAMAA) has guidelines of best business practices that they condone for business cash advance agents. If the provider giving you a business cash advance doesn't align with these guidelines, it is most likely best to look somewhere else. The guidleines are as follows:
-Demonstrate lucid disclosure of fees - NAMAA doesn't endorse closing costs as part of the application process of merchant advances but urges that any such costs be clearly explained and disclosed. The total repayment number should be fully explained and determined before finalizing the arrangement.
-Demonstrate transparent disclosure of recourse - In reality, merchant advances aren't considered loans; rather they are regarded as a purchase of future credit and debit card receipts. As such, the merchant can be held personally in debt for any cash not returned if the merchant opts to violate the arrangement.
-Be mindful of a small business owner's business cash flow - A basic arrangement involves that the merchant repays a certain amount of Visa-MasterCard receipts on a day to day basis.
-Marketing materials disclosure - All marketing 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 properly representing the terms.
-Verified payoff of outstanding Merchant Cash Advance Balances - if a entrepreneur opts to take another merchant advance with a new lender the new company should immediately repay the previous balance rather than trusting the merchant to repay the balance.
by: Daniel Samoohi.
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