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Merchant cash advance

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While many people are familiar with the process of getting a cash advance off of their credit card others may not realize that businesses can use a similar process. An established business that has been in existence for more than one year with credit card sales can qualify for a loan on their past activity (usually for up to $150,000 dollars) from a financial institution.

There are many kinds of businesses that use merchant cash advances. The numbers of businesses choosing this type of financing has been growing steadily since the inception of the merchant loan nearly 10 years ago. The reason most businesses choose to get one is pretty simple; they need working capital for their business and they need it quickly.In addition many of these businesses may have tried to get a business loan from the bank but were either turned down or they were not able to get funded in time to suit their needs.Almost every conceivable type of business can apply for a merchant cash advance. Some of these businesses include(but are not limited to); restaurants, grocery stores, beauty salons, garages, tires stores and franchises just to name a few. What all of these businesses have in common is that they all accept credit cards and do a major portion of their business from credit cards.This is the common factor between all of these businesses.

The amount of the loan is figured by taking the monthly averaged amount of credit card sales and multiplying them by a factor that is determined by the lender. Usually this factor is about 1-11/2 times the monthly rate of credit card sales. This then becomes the amount the business is able to qualify for as a merchant cash advance.One of the advantages to this type of business financing is that most businesses qualify.Obviously the heavier a business relies on credit card sales the more likely they are to be able to use this type of financing.

There are several advantages to using this type of financing.Some of them are:

  • By working with a financial institution some businesses can save up to 50% in interest.It is important to check out competitors rates to make sure you are getting the best deal.

  • Loan amounts can range from $5,000-$150,000.

  • There are no tax returns, financial statements or asset documentation that is required. This makes it an extremely easy method of financing to obtain.

  • Some programs offer up to one year to pay back the loan (some companies offer only 6-8 months so it pays to check around).

  • There are no large fixed monthly payments you only pay a percentage of your future credit card sales.This way the loan is repaid with the flow of your business cycle. The repayment occurs over the course of your business sales.

  • It usually only takes about 48 hours for approval. Loans are generally funded within seven business days.

  • Most companies offer no hidden charges and no late fees. Again, shopping around will find you the best deal.

  • Poor personal credit is not an issue with this type of funding. Business owners should understand that this type of funding is not FICO score driven so credit issues are not a problem.Most of this type of lender also accepts prior bankruptcies.

Generally there are few qualifications for a merchant cash advance.Typically most merchant cash advance lenders will expect you to:

  • Have owned your business for at least a year

  • Average at least $3000 in credit card sales per month.

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