Business Cash Advance - Working Capital

One of the fastest growing business loan option available today! Business cash advances are not business loans per say - but cash advances against FUTURE credit card sales - providing your business the working capital it needs for inventory, marketing, payroll, development or expansion.

Overview: Business Cash Advance:

Most businesses in the US, and for the most part around the world, take credit cards as a form of payment.

Credit cards help consumers and businesses make quicker and larger purchases by leveraging future income (buy now, pay later).

Business Cash Advances work the same way - by leveraging future sales.

Your business can leverage its future income, future credit card sales made in your business or store into working capital today that can be use to help grow your business (i.e. get the inventory or provide the service that consumers will come to your business and pay for).

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How It Works:

A business cash advance finance company will advance a business, who accept credit cards as a form of payment, money (working capital) against FUTURE credit card sales - THIS IS NOT A BUSINESS LOAN - but a cash advance against your business's ability to generate more in credit sales in the future!

Example: Your business averages $10,000 per month in overall gross sales. 80% or $8,000 is in the form of credit card payments. In most cases, your business could qualify for up to $48,000 in working capital monthly or can be annualized for a larger amounts.

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Repayment:

After receiving a Business Cash Advance, the finance company will require your credit card transaction payments be funneled through them, through one of their partners, or enter into an agreement with your current merchant processor to have those funds returned to the finance company (in some instances, you may have to switch your merchant processing company - but you will get a comparable one - or even a better company - in return).

When the finance company receives payment for your credit card receipts, they will remit those funds to your business, less an agreed upon amount - to include minimal repayment of principle and any finance or transactions fees.

Example: Your business gets a $250,000 advance from a business cash advance company (BCA).

You then process a $100 VISA card transaction from a consumer - of which you would receive about $97.50 after the processing fees from your merchant processing company and transaction fees (from Visa in this case).

Now, since you have taken a $250,000 business cash advance against those future credit cards sales (an advance that you used to purchase inventory for your company to get more sales) that remaining $97.50 will be funneled to your business cash advance provider who will in turn extract their payments and fees.

In this case, you agreed to repay 10% of funds received. Thus, your business cash advance company will retain $9.75 to go towards the repayment of the advance still leaving your company $87.75 - money that can go to cover overhead, marketing, payroll or taken in profits.

In the end, your business pays a mere $9.75 out of that $100 sale to cover the cash advance while your company still uses the $250,000 to grow sales, development new business, and increase profits. Not bad considering that your business also keeps the bulk of the credit card payment for additional working capital and business expense needs.

Further, a real bonus to business cash advances, is that if your company has a slow day or week, you are not stuck with a fixed payment amount like you would be with a standard business loan - trying to scramble to pull together the money for that monthly payment.

As your credit card sales come in, you repay the advance. Taking the example above: Let's say your next Visa transaction is only $50 (not the $100 payment). After the transactions fees (fees you would have regardless if you have a cash advance or not), you would only pay $4.88 towards the repayment - keeping the remaining $43.87 of the $50 to be plowed back into your company for other business expenses.

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How Your Business May Qualify:

Most business cash advance companies will require that your business has been accepting credit card transactions for at least 1 year (some may require only three to four months but as their risk is higher - they will charge more).

Further, most of these financing companies have minimum monthly transaction levels - usually around $5,000 per month (on average). The reason is that the minimum monthly volume makes it beneficial and cost effective to both parties.

Lastly, many business cash advance companies will also require that you are in good standing with your current landlord - helping to ensure that your business will be around long enough to repay the cash advance.

Just like you business, these finance companies simply want to get repaid for the money they advance out.

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Benefits:

• Funds can be used for any purpose - business or personal,
• Great for growing businesses with no business assets or business property (usually required by lenders who provide traditional business loans),
• No personal guarantee,
• No fixed repayment schedule,
• No extensive paper work or time requirement - no financial / tax documents,
• Get advances based on each of your locations,
• Limited credit, bad credit, no credit are usually OK - focused on your company's ability to generate sales,
• Quick approvals - usually less than 48 hours,
• May be tax deductible,
• Not reported on your credit report (business or personal),
• Usually, no application or startup fees,
• Great source of working capital when your business is facing a cash flow shortage.

But, the best benefit is for businesses that don't qualify for traditional business financing (due to time in business, profitability, debt ratios, credit scores, etc.) can still receive needed working capital to purchase inventory, meet payroll or anything needed to grow that business!

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Use Of Funds:

Business cash advances are great working capital financing vehicles for retail businesses, service businesses and restaurants as these types of firms tend to have high volume of credit card payment transactions

Thus, these companies can use these funds for advertising, expansion, inventory, equipment, working capital, taxes, emergencies, etc.

In fact, since their are no restriction on these advanced funds, they can be used for any business or personal purpose. But, since they are being repaid by the business, financially, they should be used to grow your business, meet payroll, buy inventory or supplies - anything and everything that helps take your business to that next level.

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