subject: A Business Cash Advance Explained [print this page] Comparable in nature to a small business loan, a business cash advance is working capital a small business owner gets for various purposes that will need to be paid back within a six to 8 month duration depending on how much financing is attained. Business cash advances are becoming increasingly utilized as conventional lending institutions are tightening their necessary stipulations for small business loan approval.
Unlike conventional bank loans, business advances don't require perfect credit. As a matter of fact, if you were denied by the conventional banks and need access to money in a fast amount of time, a business advance may be a convenient solution. As a small business owner would expect, the conditions placed upon such cash advance products commonly include higher interest rates since the advance company is taking on a greater risk.
Almost all programs permit the merchant attach the repayment schedule to income levels of the business. This is extremely useful to a merchant that has large variations in income from month to month. Payment is ultimately attached to Visa-MasterCard revenues, allowing for smaller payments during bad months. This feature is extremely useful to those entrepreneurs who are seasonal in nature because a set payment each month is not necessary.
Business advances can be of particular use to those merchants who have not been open for long. To get a normal bank loan or a loan from the Small Business Association, a merchant will be asked to provide proof of collateral, an extensive business history and a credit report with excellent scores. When a entrepreneur is just starting out in business, this may not be possible, especially in today's economic climate.
However,caution is recommended when in the market for a business cash advance. It is not uncommon to find rising payment terms, application costs and a mandatory switch to a specific credit card provider. Reading the fine print of any arrangement is a must. For those merchants who find themselves in need of money and have few other choices available, the business advance can be very helpful instead of to waiting months for a conventional small business loan you most likely will not get approved for.
by: Daniel Samoohi
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