In today’s new and challenging economy, it is important that you get the working capital you need, and improve your cash flow guarantee so that your business not only survives, but also increases. The merchant cash advance service can guarantee your business will go from power to power, even when you will face difficult times.
WHAT IS MERCHANT CASH ADVANCE ALL ABOUT:
A Merchant Cash Advance consists of a lump sum payment given for a business in exchange for an agreed upon percentage of future credit or debit card sales. Most often Merchant cash Advance companies are useful to market businesses that do not qualify for a regular bank loan.
Merchant Cash Advance is not a loan; it is a sale of a portion of future credit or debit card sales. A company’s repayments are drawn from customers’ debit card or credit card purchases on a daily basis until the agreed upon repayment has been met. These payments are made easily as most providers form partnerships with card payment processors and take payments directly from a business owner’s card swipe terminal.
ADVANTAGES OVER CONVENTIONAL LOANS:
Merchant cash advances have many more cost advantages over the structure of a conventional loan. The most important thing in this company is that payments depend directly on the merchant’s sales volumes, which will give the merchant greater flexibility through which merchants will manage their cash flow, especially during a slow season.
For merchant cash advance factoring programs no any requirements for approval of merchant processing. Merchant cash advances are purely determined on your business’s performance.
Here is an example which will explain in detail that how a merchant cash advance works: let’s say a business sells $25,000 of a share of its future credit card sales for an immediate $20,000 lump sum payment from a finance company. The finance company then collects its share (generally up to 5 to10%) from every credit card or debit card sale until the complete $25,000 is collected.
THREE IMPORTANT METHODS FOR REPAYMENTS:
There are many different repayment methods in the business but three important methods for repayments are as follow:
* Split withholding
*Trust bank or lock box account withholding
*ACH withholding
- Split Withholding: The most preferable and common method of collecting funds for both the clients and finance companies. The credit card processing company will automatically split the credit card sales between the business company and the finance company according to the agreement and the portion will be (generally up to 10% to 22%).
- Trust Bank or Lock Box Account Withholding: This method is the least preferred method, because of one day delay in the business receiving the proceeds of their credit card sales. All of the business’s credit card sales are deposited into a bank account controlled by the finance company and then the agreed upon portion is forwarded onto the business through the wire, EFT or ACH.
- ACH Withholding: When the credit card processing information received by the finance company they will deduct its portion directly from the business checking account through ACH.
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