“This is a particularly interesting time,” says a merchant cash advance funding specialist at http://www.merchantcashadvances.org. “As we see the economy bouncing back, and more businesses looking to expand and build again, they will need to find funding sources. Family will only go so far, and banks are just not lending to the risky businesses that typically come to us.”

The merchant cash industry has a strange cloud around it of rumors and uncertainties, and by some has even been labeled as over priced. The question for merchants and business owners alike is what are the best funding options for them, and what is actually a realistic option.

Some businesses seek a merchant cash advance as a desperate measure to get themselves out of a tight spot. Since the merchant advance is not an actual business loan, this means that there is no collateral attached to it, and thus it is an unsecured advance and is not tied to any personal or business assets. The merchant is obviously expected by the contract to pay back the advance, but the payback can get tricky when a business falls short and closes up its doors.

Merchant cash advance companies don’t just lend out money to any business, and although the underwriting process is much quicker than a traditional bank loan, the actual process is quick however extremely rigorous. If a business is experiencing extremely bad cash flow issues and has multiple tax leans out on it and the likes, then this is obviously an indication to the underwriters that something is off balanced and the business is in trouble. As the advance is an unsecured one, the merchant cash advance company is not looking to invest its money in an already risky sector in something that seems inevitable that it is going to fail.

All in all, while competition is tough, many businesses are looking for cash to expand or purchase new inventory, and this is precisely the type of businesses that any solid merchant cash advance provider is interested in investing in. A large benefit of this unsecured method of funding is that it opens up another door of financing for a business. Granted the advance is short term, and is geared towards plans of 6-12 months, the merchant cash advance can really help a business when it needs that extra cash flow to expand, pay off bad debt, purchase new inventory or hire new staff. As in all things considered, businesses need to decide if this is the right financial method for them.

In addition to a regular merchant cash advance program, there are also starter programs out there which are geared towards newer businesses (3 months old) who are looking to infuse cash into their businesses. These programs tend to be less flexible and have a fixed payback rate and fixed funding amound

“We have many customers who love our product and continue to take it out. Many of these companies have been able to expand to new locations and end up making a lot of money off of the money they take out. That’s what this is all about. We’re here to help companies make money.”

The causes of the major economic downfall are important in the macro sense, but to the average business owner what it means is that the banks had to be bailed out by the government, and thus the banking procedures and underwriting got much stricter than they were before. Whether we are truly seeing a shift in banking methods on a national level or not is something that is up for debate – but a major effect from this crash is that businesses are finding it difficult to expand because they cannot receive loans from banks.

http://www.merchantcashadvances.org provides business owners with that extra cash they need to expand their businesses, whether it be to stock up on inventory, to pay pass due bills and high interest credit cards, to renovate a location, to expand to a new location, or to purchase new equipment. Every business owners knows that it is absolutely critical to have access to a line of credit.

While a merchant cash advance is typically more expensive than a bank loan, it is a much faster underwriting process. Within 24 hours, your business can be qualified, and within 72 hours, your businesses can have up to $500,000 in your bank account.

Feel free to contact one of our agents today!

1. Own a business – You must own a business in order to qualify for a merchant cash advance.  Most lenders require that you have been in business for at least 6 months.  Startups do not qualify!
2. Accept Visa/MasterCard as a form of payment. – A lender will advance a business owner an amount of money against his future credit card receivables.  The lender will collect the money back by taking a percentage of the future credit card sales.  In order to qualify for a cash advance the merchant must process Visa/Mastercard and usually process at least $5,000 a month.
3. Discharged bankruptcies – Most lenders want to see that the merchant has no open bankruptcies, and if he has been in a bankruptcy, that he has been out of it for at least one year.
4. Current with Rent – Perhaps the most important reference a lender will check is the landlord/mortgage.  Some companies will pay for merchants who are behind 1 month in rent.
5. Above 500 personal credit – While a business cash advance is an unsecured loan, and personal credit does not play a large role, if your credit is sub-500 then you probably will not qualify for a traditional loan.  You may qualify for a starter program.
6. Accept methods of payback. – There are only three ways a lender can collect the percentage of Visa/MasterCard sales.  a) split funding b) ACH c) Lockbox.  There are no other ways, and you may not qualify for one or two of them.
7. Tax Lien Payments – Lenders want to see that you are on some sort of payment plan for tax liens.  If you have a lien you can still qualify, but you need to be current with payments.
8. Franchise and Royalty Fees – Merchants must be current with their franchise and royalty fees.
9. Paperwork – Be able to provide the lender with 3 months most recent bank statements and at least the last 4 months merchant processing statements.  This may very with every lender and on seasonal businesses
10. Be Friendly! – Character believe it or not plays a large role whether or not you obtain a cash advance.  All lenders will conduct a merchant interview and it certainly helps to be friendly and cooperative.  If you are rude, they probably won’t fund you.

In this type of small business loan, a Merchant agrees to sell his future credit card sales at a reduced rate. This means that a loaner will loan the owner an amount of cash, for a fixed unchanging rate (in merchant cash advance terms this is called the multiplication factor, or the cost of the dollars — not to be mixed up with interest rates). The loaner will take a share of the small business owner’s Visa MasterCard sales whenever he batches out of his credit card machine, which will normally run between 10 % -25 %, until the loan is paid back. The percent is fixed but the exact dollar quantity repaid month to month changes as the vendor’s total Visa MasterCard sales fluctuate monthly.

This is type of loan is considered short term, and broadly loaners like programs that run between five to nine months as it cuts the risk agent. There isn’t any interest that collects monthly on the program therefore business owners know precisely how much they are paying for the money from the beginning. There aren’t hassles of monthly bills or late fees as the loaners take their share automatically after every time the small business owner batches, until the sum is paid back. This is an unguaranteed loan, and there is no collateral or personal guarantor.

NOTE: The term “small business loan” is used loosely in this article as merchant cash advances are not actual loans.

The programe works like the following: a small business loan lender will advance a business owner money at a fixed cost. The loaner gets the money back by taking a portion of the small business owner’s Visa MasterCard credit card receivables until the small business loan is paid back in full. The cost of the plan is determined by the proposed time period it takes to pay back the small business loan. The business is usually not required though to pay back the small business loan under any time period.

In general the small business loan procedure is speedy and not terribly paperwork heavy. Most loaners will require minimum paperwork initially, including a few months bank statements, a few months merchant processing statements and a filled out form. After an general agent examines the financials, figures can be created within 24-48 hours and contracts can be produced that very day given the business owner and the small business loan loaner agreed about the amount of the small business loan, the cost of the small business loan, and the portion of Visa MasterCard receivables recouped.

Note: The term “small business loan” is used loosely here in this article as a merchant cash advance is not a true “loan” but actually a purchase and sales agreement.

To learn more about factoring and more about merchant cash advances click here!

To learn more about personal credit, and business credit then click here!

Many merchants who receive funding from private lenders have additional problems with their businesses including tax liens, open collection accounts, and late payments on rent and venders.  These are all definite deal breakers with banks.  Our advice to merchants is to provide the merchant cash advance lender with the proper full documentation that they request.  It makes the process much longer when random pages are sent in.  In the end, the lender will need at least, full bank statements, and full processing statements in order to fund the business, so merchants might as well submit the documents in a organized fashion.  Lenders understand that merchants are also busy running their business, but they can’t possibly fund a deal without the required documentation.

To submit your information to a top lender click here!

In the rare case that a retail or restaurant merchant actually does qualify for a traditional bank loan it takes weeks, if not months, for the funding to actually occur.  During this process the bank is constantly collecting information on the merchant, and building up a large file so that it can make a very accurate assessment of how much money the bank can lend, at what rates, and how fast the bank will get paid back.  During this processes they also analyze the amount of risk that is involved with funding the business.

A merchant cash advance is a quick alternative to this method of funding.  With that, merchants must understand that the private lender is taking an enormous amount of risk on his end to advance the money.  He is advancing money based on a small amount of information.  For this reason, the amount of money actually funded can fluctuate during the underwriting processes, and merchants should not be surprised when this happens.  In addition, sometimes merchants may be working with a broker who will submit the information to two or three different lenders.  One lender might approve the business for an amount of money and then a few days later “kill the deal,” before it is funded because of certain aspects about the merchant’s business that he didn’t like.  Another lender may pick up that deal, qualify the merchant for a different amount of money and fund it at similar or different rates.

For an in-depth discussion about the difference between brokers and lenders click here!

Historically merchant cash advance lenders have had the most problems with home based and online businesses. Unlike restaurants and retail locations who are locked into leases or paying a mortgage, home based and online businesses can close down their operation without as much difficulty as businesses with store fronts. This isn’t to say that online businesses and home based businesses aren’t eligible for merchant cash advances. There are lenders out there who specialize in these industries, but merchants must be aware that there is simply more risk in providing funding for these business types. For a list of the top merchant cash advance lenders click here!

The merchant cash advance industry has expanded to many types of businesses that typically were not eligible and now are, but many of the industries which were once easily funded are now finding it increasingly difficult to find funding from merchant cash advance companies. The most recent recession has had a toll on small to medium size businesses, and many turned belly up. Some of these industries suffered as a result of the crashing housing market, or because consumers didn’t have the money this year to spend on luxury items. Many that are making it through the recession are also finding it increasingly difficult to stay afloat, and have been seeking help from banks and merchant cash advance companies. But some industries have historically performed poorly when taking out a merchant cash advance. Below is a list of industries that will find it more difficult to obtain a merchant cash advance. This list is not set in stone, and many times there are exceptions, but it is to act more as a guideline for merchants who are applying for a merchant cash advance. To find a top lender click here!

Jewelry
Upholstery
Furniture
Automobile Dealerships
Landscaping
Cell Phones
Travel Agencies
Plumbing
Tile