Qualification
In order to qualify for a business cash advance, a merchant must process Visa/MasterCard. Most companies require that the merchant has been in business for more than six months because what lenders are really doing is predicting what future credit card sales will be, and thus they will be able to produce a program that will give them a payment schedule. While lender’s favorite industries are restaurants and retail business, just about every type of business can find a lender who is interested in funding.
For qualification most companies require recent credit card processing statements, bank statements, and a filled out application. For seasonal businesses, the lender will like to see full season’s statements of processing statements. Lenders request bank statements for two reasons:
1) Cash flow and 2) Additional Debt.
1) Lenders understand that many merchants are looking for additional working capital to help out their cash flow, as they may be incurring NSF and overdraft fees – so merchants should not be hesitant about if they qualify because they are incurring these fees. A good lender will be concerned with the merchant and his best interest, and will want to see the merchant benefit from the money as it guarantees that the lender will get paid back, and the merchant will come back for more money. For this reason a lender wants to see what the merchants gross sales are, that way they can gauge what percentage of the merchants credit card sales are safe to take so that cash flow is not affected.
2) The business cash advance is an unsecured loan and thus it is a risky method of lending. Unlike banks which can come after borrowers’ houses, businesses, cars and equipment, in this industry all the lender owns is a percentage of the merchant’s credit card receivables. When a merchant takes a business cash advance with a lender, a Uniform Commercial Code (UCC) is filed against the business which claims that the lender has a security interest in the merchant’s future credit card receivables. In order for the merchant to take out another cash advance the current cash advance must be paid off. Lenders ask for the additional bank statements to see if there is any additional debt that the borrower has, or if there is another cash advance company that already owns the merchant’s credit card receivables that it needs to pay off before advancing the merchant more money.
To read about the initial underwriting process click here!
Rapid Advance, located in Bethesda Maryland, was founded in 2005 and is led by CEO and Chairman Lee J. Jundanian. With an 80% merchant approval rating, it is a leading source for direct funding, and offers three different lengths of programs ranging between four, six, and eight months. They have partnered with TriSource Solutions as their merchant processing services. Rapid Advance requires merchants to be in business for at least one year, to process at least $2,500 in Visa/Mastercard, have at least one year left on a lease (if applicable), and have settled all prior open bankruptcies.
Overall Rating: 3.4
1) Documentation needed for qualification: Not advertised
2) Application processed within: 24 hours – 5 stars
3) Max Qualification: $600,000 – 5 stars
4) Minimum Merchant Processing $2,500 – 4 stars
5) Factor Rates (Cost of the money): Not advertised
6) Ability to Qualify Merchants with poor credit – 4 stars
7) Length of time Merchant in businesss: – 12 months – 3 stars
Customer support and extended relations: 4 stars
9) Merchant Processing Solutions: TriSource Solutions – 4 Stars
10) Next day funding: Not advertised
11) Methods of Funding: Split Funding - 1 stars
12) Prepay Option: YES – no penalties incurred but no discount – 3 stars
13) Finder’s Fee: Non – 5 stars
14) Time takes until Funding: 7 business days – 3 stars
15) Referal Rewards: Not Advertised
16) Additional Types of Loans: Non – 1 Star
