How to Obtain a Business Cash Advance and Working Capital Loan
Using Credit Card Processing to Improve Small Business Cash Management
by Stephen A. Bush
Summary:
Obtaining a business cash advance by using credit card processing is often overlooked by business owners. This important business financing strategy is applicable to most retail and service businesses.
Precautions:
(1) There are a number of critical problems to avoid when obtaining a business cash advance.
(2) A business cash advance is not the only source to consider for additional working capital.
Quick Tips:
(1) Most businesses which accept credit cards can obtain a business cash advance.
(2) This strategy is also referred to as credit card financing and credit card receivables factoring.
Business cash advance and credit card processing management is frequently one of the most overlooked sources of working capital for a business. This article will provide a concise and practical introduction to what a business needs to know about using this business finance strategy and how to obtain a business cash advance.
Businesses should not overlook the substantial working capital business loan benefits which will accrue to their business by effectively coordinating business cash advance and credit card processing programs. Improved cash flow and reduced costs are key results of successful coordination of these business financing services. Perhaps most importantly, a business cash advance based on credit card processing is one of the few viable options for reliably obtaining short-term commercial financing for many service and retail businesses.
Before we begin, there are two key points to keep in mind. First, business cash advance programs can be a source of confusion and problems, and proper anticipation of these potential difficulties is essential for a business owner considering this working capital strategy. Second, business cash advance programs are often referred to by other names such as credit card financing, merchant cash advance and credit card receivables factoring.
Here is a suggested process for reviewing possibilities to improve credit card processing and simultaneously obtain a business cash advance:
Realize that the business cash advance strategy is not readily available until a business has been operational for at least one year.
A further limitation is that the business must have been using credit cards as a form of payment by customers. New business owners will nevertheless be wise to educate themselves about this business finance strategy in preparation for possible application a few months down the road.
Determine how much additional working capital your business needs.
In general a business cash advance is typically possible for amounts varying from $5000 to $300,000 (the amount will depend on the monthly credit card processing volume for a business).
Review your monthly credit card volume as well as cash receipts from your customers during the past six months.
It is not unusual for a business to experience cyclical variations in their monthly receipts, and these fluctuations are generally acceptable in calculating the potential for a business cash advance.
Avoid business finance sites which request that a business owner submit an online application for a business cash advance.
To illustrate the problems associated with an online business financing application, we have prepared a special commercial finance report entitled "How and Why to Avoid the Online Business Loan Application Trap".
Talk to an experienced business cash advance expert.
You should avoid high-pressure representatives that make unrealistic promises about how quickly the credit card financing process can be completed. A realistic expectation is that a merchant cash advance can be finalized in a period of two to four weeks. A knowledgeable working capital financing expert will be able to provide an initial assessment of potential (and realistic) business cash advance options.
Explore additional resources that will facilitate a better understanding of complex credit card factoring and small business funding issues.
You should look for sources which will provide relevant strategies and solutions for any business owner contemplating a future business cash advance or other forms of small business loans.