Get the funds you need now!

You may have heard of payday cash advance loans for individuals? Do you write a check and the cash advance store gives you cash now and deposits your check/debit to your account on your next payday? Well, there is a similar product available for the small business owner. If you accept payments from customers’ credit cards and have been in business for at least a year, there are finance companies that will essentially buy you a portion of the next year’s credit card sales and give you a lump sum of cash. which you can use. now for any business purpose: purchasing inventory, business expansion, opening a new location, advertising, any purpose you deem necessary.

There is no credit check. You simply need to provide your credit card merchant account statements for the past few months to demonstrate the volume of business you are making from credit card sales. Using formulas that may vary slightly, the finance company will advance money to you now and then pay it back to you by deducting a portion of your future credit card sales for up to a year.

The process is quite simple, the application is only one page and you can receive funds within a week or so, deposited directly into your business checking account.

The catch is that you need to change who you process your cards through to a merchant account set up by the merchant service provider (MSP) that works with that particular finance company. The MSP will automatically hold a portion of future credit card sales, rather than depositing them into your business checking account, and will forward those held funds to the finance company to pay your cash advance.

The product technically and legally is not a loan. Basically, you are now selling your MSP accounts receivable to the finance company for immediate cash.

In addition to repaying the advance amount, of course, the finance company will charge you a fee for their services. Although the fee is not “interest,” as in a loan, the fee is typically about 16-20% of the loan amount. So, for example, you are advanced $100,000 and for the next 12 months you pay $10,000 per month for a total payment of $120,000.

20% may sound high, but if your business can generate a lot of additional income by investing the advanced funds in your business, it might be the right way to go. If your personal and business credit is not in sterling or if your business is newly established, it may be the only way to obtain the necessary funds. It goes without saying that in today’s economy, getting a business loan is a long and difficult process with no guarantee of success.

Talk to your MSP agent who services your merchant account about this product. Check with your accountant and decide if this is a solution that would work for your business.