Merchant Cash Advance

Strong Credit Card Processing Sales

Regulators are now swooping down in terms of scrutiny and the merchants are in a huddle to promote industry standards. These merchant cash advance providers offer a lump sum payment to businesses. In exchange, they get a share of sales in the future. Companies that are targeted are mostly retail, restaurant and service oriented businesses. These usually have strong credit card sales but need bad credit business loans. This means they don’t qualify for typical business loans. The question here for businesses that take avail of the offer is how much do these advances compare to an interest on a loan or credit line.

These are NOT Business Loans

According to Leonard C. Wright, an accountant for San Diego and a columnist for the American Institute of CPAs, the interest rates can go from 60% to 200% APR. He recommends businesses to have no other options to go for the credit card factoring (merchant cash advance) but fully understand what the costs are. Merchant cash advance providers are protesting the allegation. They remain that they are not business loans. Instead, the deal they get from the merchant cash advance is a purchase or a sale of an income that they will get in the future.

These are Essentially Unsecured Business Loans

Merchant cash advances are therefore not under the obligation of law that otherwise regulates lenders and puts ceilings on interest rates. They do not require a fixed payment and instead collects a regular percentage out of the merchant’s daily credit card processing sales. This goes on until the advance and premium is recovered ideally in less than 12 months. The advantage to this says merchant cash advance business owners is that their payment is dependent with their cash flow.

This differs from a credit or loan where there is a set date when they need to pay. Fixed payments also have to be done on a schedule.

"In a merchant cash advance, there is no schedule of fixed payments and there is no due date” - stated a representative of MerchantCashinAdvance, the pioneer in the merchant cash advance industry.

Tags:

Merchant Cash Advance, Unsecured Business Loans, Credit Card Factoring, Bad Credit Business Loans, Credit Card Loans, Merchant Factoring