Three Steps to Get a Merchant Cash Advance

Now that the tight credit market has made it very difficult for many small business owners to qualify for a conventional business loan, they are turning to merchant cash advance [1]s to grow their businesses or to tide them over a financial hump.

A merchant cash advance is a type of loan made to a small business owner based on future sales receipts. It can be anywhere from $20,000 to $500,000. The amount for which you will qualify depends on the amount of projected credit card transactions made by your business each month. The provider’s repayment is based on a percentage of these future credit card transactions. The advance is unsecured, requires no collateral and no credit check, and is not reportable to the credit agencies.
The merchant cash advance industry is relatively new; it has only been around for the past ten years. However, in this tight credit market, cash advance providers are multiplying rapidly. Before applying for a merchant cash advance, business owners should get the facts. There are three steps to follow:

• Do the math and calculate the minimum and maximum amounts you will need to cover your goals. You should borrow only the amount you will need.
• Investigate the company that will be advancing your funds. How long have they been in business? Do they have a good reputation? Are they a cash advance provider, or a broker? What percentage of your future credit card sales will the provider charge as their fee?
• Once you decide on a provider, be prepared to complete a brief application, along with copies of your business’s bank and tax statements for the past six months. Insist on a contract, not a Xerox of your application. Remember that once a contract is signed, it is binding.

Follow these tips, and you will be better prepared to speed up the process and be satisfied with the repayment plan.