How To Get a Business Cash Advance

You own your own business.  Some days it's good, some days it's not so good.  Right now you need some extra help to see you through those lean times.  Where can you go about getting that help?

Most of us are familiar with the loan process.  When it's a business though, it can be even harder.  A lot of times a small business owner will have to personally guarantee a loan.  You have to jump through all kinds of hoops to get a loan directly tied to your business.  Often it's almost impossible because the business itself hasn't been around long enough to build its own credit history.  So lenders will look to the owners.   

Because of this Catch-22, a specific type of Business Cash Advance loan has emerged.  If you own a business, and you take credit cards, you could be eligible for a cash advance based on those monthly credit card receipts.  Your repayment schedule is based on the amount you receive each month.  This can be especially beneficial for seasonal businesses.  If your repayment schedule calls for a 6% repayment each month, and your January credit card sales equal $5,000, then your repayment for January is $300.  If your February credit card sales equal $8,000, then your payment for February is $480.  Now it's May, and sales have nearly stopped.  Your credit card sales are $1,000 and your repayment is $60. 

In theory, you can afford to make a bigger payment when sales are higher.  Often that's true.  But you will need to check out your own particular situation to make sure that's the case. 

  1. One of the requirements for this type of loan is that the lender gets repaid from the credit card sales directly.  A portion, at the agreed upon repayment rate, is automatically sent from the credit card company directly to the lender.  It saves you the trouble of having to remember to make the payment and it provides the lender with a comfort level that the payment is going to be made. 
  2. There are quite a few companies out there offering this type of loan.  Make sure you shop around.  You will be paying interest and the rates will vary.  You may also be able to negotiate the actual percentage you will be required to pay back each month.  Even within one company you may have several options.  You may have a lower repayment schedule with a higher interest rate or vice versa.
  3. This may solve a problem for you.  But be careful.  Because this is coming directly from your credit card sales, you will be paying them first.  Make sure you press them for any fees and your actual interest rate.  I was actually pitched one of these plans about 4 years ago, and I couldn't get the salesman to tell me what the rate was.  I finally did the math, and it was obscenely high.  However, these plans are much more popular these days and competition usually lowers interest rates. 

Here is one website where you can get up to five lenders to give you information so that you can compare plans.  But be aware that people will start calling you on this.  The website is Resource Nation.  Of course you can check with various lenders directly as well.  Just make sure you shop around so that you get the best plan for you.


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