Any business can sometimes end up with a cash shortage. Even a very successful business can experience the situation that they have to pay their creditors and the payment from their debtors is not forthcoming. This is when a business cash advance can be a godsend.
There are many differences between such an advance and an ordinary bank loan. In the first place the application process is much easier. You can apply online and you don’t have to produce financial statements or business plans to qualify. All the company will normally be interested in is the amount of credit card sales you generate every month and how long you have been in business.
What you are in effect doing is selling a portion of your future credit card sales to generate cash right now. You will normally be required to repay a certain percentage of credit card sales every month, generally eight percent. Your credit record is therefore not influenced by this, since it’s treated as a sale and not as a loan.
You will also receive an approval or denial much earlier than is the case with a traditional bank loan. A bank sometimes takes several weeks before they give you a reply. This is because the application has to go through a complex system of checks and balances and your credit worthiness and financial statements have to be checked thoroughly. When applying for a cash loan you can have the approval and in fact the money within a few short days. From a business point of view this is ideal. If your creditors are waiting for payment, another week won’t make a huge difference. A month or more could, however, result in your credit rating to be adjusted downward or even canceled.
The approval rate of this type of funding is also significantly higher than that of bank loans. Since your credit worthiness and financial statements don’t influence the decision, all that matters is whether you generate sufficient credit card sales or not. As a rule of thumb five thousand USD is the minimum amount of sales to qualify for such an advance.
With an ordinary bank loan the amount of the monthly repayment is fixed. In this respect a cash advance is also much more convenient for the average business. The amount you have to repay is based on a percentage of your credit card sales. If you have an excellent month, you therefore have to pay more than when you have a bad month. This makes a lot of business sense.
A business cash advance need not be used only for the repayment of creditors. You are free to use it to purchase inventory ahead of the peak season. You could also utilize it to buy new machinery which you need to expand your business.
Even though there is no interest rate or monthly repayment terms, this is not a free grant either. There are no fixed payment plans for business cash advance. Business Cash Advances It gets repaid automatically when you process a Visa or Master Card Sale.
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