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Is Business Cash Advance a Good Option?

Monday, March 22nd, 2010

Small businesses are always on the lookout for capital funding. They have to  take risks to grow, and taking risks requires capital.  Cash Advance for small business is fast gaining popularity as a means for small and mid-sized businesses to get business loans without pledging any collateral or securities.  

Before taking a business cash advance, small business owners and merchants must understand how business cash advance works. The small business owner should research the market for the current business cash advance rates and approach only the best business cash advance companies to avoid a bad deal.

Small business cash advance is a good option when:

  • other loan options are not available for you financing needs
  • the small business does not have a good credit score
  • the company has been in business for atleast  1 yearand has $5,000 in monthly credit card sales

Traditional small business loan options do not fit the bill

Small business owners can get a home equity loan if they have a house to use as collateral. The interest is low, but the risk is high. The home equity loan will be used to fund the business. If the business fails and the loan cannot be paid off, the business owner may lose the house. Some small merchants rely on credit cards for cash flow, but again, this type of funding is limited and at a much higher interest rate. In addition, there is the risk of being penalized for late payments or non-payments.

The best business cash advance companies are not creditors but are true business partners sharing in the risk and reward. They receive a percantage of the merchant’s credit card sales at a discount in exchange for the merchant advance. The percentage varies based on the merchants monthly credit card processing. The small business merchant does not have to worry about installments and due dates.

Good credit score is not a criteria for cash advance approval

Risk is a necessary element in business. Unlike big businesses, small businesses do not have the cushion to survive risks without affecting their credit score. Credit score is a major criteria for banks to approve business loans. This works against small businesses that are running perfectly now, but may have had bad credit 4-5 years back.

Business Cash Advance companies do not look at history. The focus is on the current sales revenues of the business. Though Business cash advance lenders also verify the credit score, it is notas important as the average  monthly credit card sales volume.

Average Monthly Credit Card Sales is very important

Business Cash Advance companies verify the average monthly credit card amount processed by the business in the previous year, before approving the merchant advance. The amount of the business cash advance depends on the volume of credit card sales. The business cash advance company specifies the total amount advanced and the percentage of credit card sales it will receive, in the contract with the small business owner. Once the contract is signed, the credit card processing companies takes care of the payments to the business cash advance lenders.

Business owners should understand the eligibilty requirements for business cash advance and the merchant loans. A business that does not have atleast $5,000 in monthly credit card sales and has been in business less than 1 year should not consider business cash advance as a financing option.

Banks are going through hard times with loan defaults and cash deficits. Traditional business loans have become very difficult  to come by and small businesses need to look elsewhere for funding. Business cash advance is an excellent option for small business owners looking for quick and unsecured business loans.

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Small Business Cash Advances Bail Out Main Street

Tuesday, March 16th, 2010

The current economic crisis has seen a new funding source emerge to bail out small businesses – Its called Business Cash Advance.

Commercial bank loans, and in particular small business loans, have been one of the casualties of the financial meltdown. This has resulted in small business owners and merchants requiring an excellent credit rating to qualify for traditional small business loans in this current economic environment. And If you do qualify, you risk losing your homes and personal property if used as collateral for such loans.

But, cash flow is the lifeblood of every small business. It is used to for necessary working capital – to pay employees, suppliers, stock up on inventory and invest in business expansion. And Cash advance businesses have stepped up to bail out small businesses on main street. Their process of extending small business cash advance does not depend on your credit score. A good credit score is definitely a plus, but not the most important factor to getting a business cash advance. If you have been in business for more than 1 year and have atleast $5000 USD in monthly credit card sales, your small business is an ideal candidate for a business cash advance.

There are many advantages to taking a business cash advance:

1. Simple and Easy Application process

Business Cash Advance Companies need only two details from the small business — monthly credit card sales and the length of time in business. This is unlike banks where two year tax returns, financial statements and business plans need to be furnished to be considered for a small business loan. Most cash advance businesses expect at least $5000 in monthly credit card sales and a minimum of 1 year in business for you to qualify for a business cash advance.

Repayment of the cash advance is also simple. The credit card processing companies that handle the credit card processing for small business deduct the mutually agreed percentage amount of all future credit card sales and deposit this amount in the bank account of the business cash advance company until the loan has been fully paid back.

2. Quick disbursements

The cash advance business can easily verify the credit card sales and credit score as the information is available online. There is no other paperwork required for business cash advance approval. The approval goes through quickly and the business cash advance is disbursed to the small business within 2 weeks or less. The small business can use the funds for immediate working capital needs such as paying off creditors, sale promotions or investing in business opportunities such as expansion, e-commerce website etc.

3. No collateral is required

Small business owners are often in danger of losing collateral if they are unable to pay back a traditional small business loan. As business cash advance companies do not need a collateral against the loan, small business owners can do away with that worry. Moreover, the relation between the cash advance businesses and the small business is that of a buyer and a seller, not a creditor and a debtor. The cash advance business has purchased a percentage of the credit card sales on a discount in exchange for the small business cash advance. The credit report of the small business will not be impacted by this transaction.

4. High approval rate

Business Cash Advance companies place their trust on the small business’ capability to keep performing rather than its credit history. Most small businesses that have more than 1 year of business history will qualify for a business cash advance. The amount of the cash advance depends upon the average monthly credit card sales revenue of the business in the previous year.

5. Performance based re-payments

The best part of a business cash advance is that it is paid off in amounts that are proportional to the credit card sales receipts of the small business. If the small business has good sales month, the cash advance business get paid more. If the business has a slow month, so does the business cash advance company. This arrangement frees the small business from the pressure of sufficient monthly sales to pay off fixed installments. The business cash advance companies share the highs and lows of the small business.

Low interest loans are ideal for business plans with a long term horizon. However, if the small business needs funds immediately, business cash advance is the best option as it is approved and disbursed in less than 2 weeks. It has been the only bail out available for main street small businesses to survive this great recession.

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Business Cash Advance Steps Up When Small Business Loans Step Out

Friday, February 26th, 2010

Commercial loans, and in particular small business loans, have been one of the casualties of the financial crisis. In this environment, small business owners and merchants are finding it important to understand the potential for using business cash advance also known as credit card cash advance as a substitute for small business loans and other traditional sources of financing such as sales financing, factoring services, equipment leasing etc. Not surprisingly, business cash advance has been growing as other financing alternatives have become scarce.

Business cash advance involves selling credit card receivables at a discount, as a means of getting cash in exchange for those receivables more quickly. In this sense, it is an exchange of money for time–the business does not get the full amount of the receivables, but it gets an immediate cash infusion that can be used as working capital or for business expansion. Business cash advance can make the difference for businesses that are booking healthy credit card receipts, but won’t get paid on credit card sales for several weeks. When the business has to make payroll and pay suppliers week-to-week in order to keep making those sales, some form of short-term credit is required. Merchant cash advance can be the answer.

Three Ways to Get More out of Business Cash Advance

Not surprisingly, cash advance for small business is a growing industry. The business grew by 50 percent in 2009, reaching a total value of $700 million. Not only are more businesses using merchant cash advance, but managers are finding ways to get more out of this funding source. The following are three examples of how a small business could get more and better use out of credit card cash advance:

  1. Manage cash flow timing. Where there is a mismatch in timing between the cost of doing business and the receipt of revenues from that business, credit card business cash advance can bring the two more in synch.
  2. Use opportunity cost to measure payback. While small business cash advance may be more expensive than a typical small business loan, the latter is not a valid benchmark when commercial loans aren’t available. Instead, managers should use opportunity cost to compare with the cost of a merchant cash advance.
  3. Shop around. Even though business cash advance can be expensive, small business owners and merchants can minimize the cost by using internet resources to shop around for competitive terms.

One of the advantages a small business has is flexibility. By turning to business cash advance in the absence of other financing sources such as government grants and small business loans, small business owners and merchants can use that flexibility to weather the great recession.

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Top Ten US Cities for Starting a New Business

Monday, February 22nd, 2010

Where some people see obstacles, others see opportunities. That’s certainly the case with starting a small business during a recession. While most people naturally focus on soft demand and the scarcity of capital, those with a contrarian eye see weakened competition, reasonable real estate costs, and a large pool of potential talent available.

One important factor is that the recession has not hit all parts of the country equally. Therefore, if you pick your spot correctly, you can still find a good place to start a small business.

Top Ten US Cities for Starting a New Business

There are many factors which make a particular city a good location for a new business, including general economic conditions, size and skill set of the employment pool, supply and demand, infrastructure (both physical and technological), and population growth.

Here are a list of 10 US cities where you can find many of these above favorable factors:

  1. Raleigh, North Carolina. Raleigh benefits from an economy that is more skewed towards technology than manufacturing, so it has fewer industries suffering from long-term, non-cyclical declines. The IT base plus a strong presence of higher education helps to create a skilled pool of potential workers. Also, Raleigh is helped by the fact that some other North Carolina cities are also thriving, making businesses in Raleigh well situated to broaden out their markets. Outsource where possible.  Basic business support needs such as direct mail, call centers and telemarketing can all be readily outsourced to reduce your upfront investment and help you focus on the unique value proposition of your business.
  2. Fort Collins, Colorado. Like North Carolina, Colorado benefits from having multiple areas which are maintaining economic growth despite the recession, which certainly helps a business gain momentum. Fort Collins in particular benefits from a combination of a relatively high median income level and a high level of educational attainment among its populace.
  3. Houston, Texas. Already a major metropolitan area with over 5 million people, Houston still enjoys a below-average cost of living.
  4. Lincoln, Nebraska. This is a good choice for a cost-conscious start-up, because Lincoln features both a low cost of living and a low cost of doing business.
  5. Sacramento, California. Like most of California, Sacramento has seen dramatic price declines due to the real estate slump. However, while these create potential bargains, the city still benefits from a growing cultural and entertainment scene plus easy access to numerous outdoor recreational attractions.
  6. Austin, Texas. Austin has enjoyed strong job growth, which is a fundamental sign of a thriving economy. A business contemplating e-commerce solutions may also be interested to know that Austin made Forbes magazine’s list of the 30 most-wired cities in the country. Use an attractive website design, internet  marketing and credit card processing solutions to lower promotional costs and increase sales via online channels. Internet marketing solutions like pay-per-click and SEO can be cost-effective ways to sell your products and services online.
  7. Boise, Idaho. While still relatively small, Boise has enjoyed strong net migration, which suggests a growing pool of potential talent.
  8. New York, New York. It’s not cheap, but it remains the world’s greatest city in the eyes of many, as evidenced by the fact that it still ranks near the top nationally in population growth. With businesses closing up shop and both retail and office space sitting idle, you should have plenty of leverage in rent negotiations.
  9. Huntsville, Alabama. Huntsville is projected to have one of the fastest-growing job markets in the country, which should translate into a fast-growing retail base.
  10. New Orleans, Louisiana. Last year, the U.S.Census Bureau named New Orleans the fastest-growing city in the United States. While this is largely a bounce-back from the effects of Hurricane Katrina, New Orleans offers new business start-ups a chance to be part of that comeback story. The Small Business Administration’s Disaster Loan Program is providing low-interest, long-term loans administered directly through the federal government. Another quick way to raise cash is to forgo the credit market altogether and leverage future profit instead. Business cash advance also referred to as merchant cash advance offers businesses a “cash jumpstart” based on their credit card receipts. Available through credit card processing companies and independent business cash advance companies provide immediate access to operating funds between $2,500 and $250,000. In exchange, the merchant agrees to remit a portion of future credit card receivables to the merhant cash advance provider. The credit card processors handle the transaction, automatically deducting a fixed percentage of each month’s credit card revenue. Revenue-based “repayment” allows businesses to manage their cash flow, paying more in flush times and less when resources are tight.

Obviously, location isn’t the only factor that determines the success or failure of a new business venture, but it can make a big difference when the economic wind is at your back.

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How President’s Day Can Benefit Your Business

Wednesday, February 10th, 2010

Presidents’ Day is supposed to celebrate two of the United States’ greatest leaders, George Washington and Abraham Lincoln, but that’s not what usually happens on the Presdient’s Day holiday.

What comes to mind when you think of Presidents Day?

Its car sales, mattress discounts or furniture bargains. Retailers use the February weekend to move inventory by dropping prices on their available stock. Find out how your small business can stake a claim to the Presidents Day Weekend Sale.

1.      Partner with Retailers

If you sell clothes, cars, mattresses, furniture, or appliances, please stop reading here. Any other business can angle in on the President’s Day sales by teaming up with the aforementioned businesses. Some ideas:

  • Business Cash Advance… partner with merchants and retailers to provide them with the necessary working capital so that they can clear out their inventory by dropping prices and making Presidents Day a blockbuster sales weekend.
  • Search Marketing… retail businesses need your help creating President’s Day-themed pay per click marketing, SEO and more.
  • Call Centers… could help retailers with anwering service calls and inquiries from potential customers regarding Presidents Day sale, hours of operations, available product discounts, returns etc.

2.      Develop a New Product or Promotion with a Presidents Day Spin

Don’t have a remotely presidential product or service? Create one! One clothing boutique owner held a President’s Day sale on everything red, white and blue in the store. A hotel drummed up February business with the ad copy: “Give her the first lady treatment she’s really been wanting… get the presidential suite.”  Tell a Presidents marketing story on your e-commerce website or physical storefront and you’ll find ways to divert those Presidents Day sale dollars to less traditional products and services.

3.      Celebrate Presidents Day Weekend with a “buy one get one free” special

The central message of President’s Day happens to coincide with a time-honored marketing strategy for clearing out inventory: “buy one get one free”. With the on going recession, now might be the time to offer a “buy one get one free” deal for your product or service: anyone can fall in love with  “2-for-1” low prices during this deep recession.

4. Presdient Obama’s Memorabilia lets supporters make the most out of their bragging rights.

With first African American President in the White House, President Obama fans will wear the victory on their sleeves –and coffee mug, license plate, or anything else that can be stamped with President Obama’s picture for 2010 and beyond. Don’t feel restricted by whether or not an item has anything to do with President Obama. In fact, the more unconventional it is for an item to carry President Obama’s picture, the more in demand it might be.

In the words of President Shirley, “this Presidents Day, it is appropriate to remember history and to consider why America celebrates the lives of its first and 16th presidents, considered by many scholars to be the two greatest we have ever had.” Follow these creative Presidents Day strategies and let your celebration of the country’s Presidents George Washington and Abraham Lincoln blossom into positive cash flows.

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Saving Small Business

Thursday, February 4th, 2010

If slow sales, piling debt and cash flow crunch are weighing down your small business, you have good reason to worry. Your small business would not be the first to become a victim of this economic recession. Hardly heartening news, but true. The point is, is this where you choose to give up or are you willing to give it all you have?

The last year has seen the rise of an unconventional finance source – business cash advance. The business cash advance or merchant cash advance (MCA) industry is relatively new, and it has pulled many small businesses out of the clutches of the global crisis. Though the lending rates are higher than small business loans, business cash advances do not need  a business plan, guarantees, liens, or collateral. Business cash advances range from $3,000 to $300,000 with the majority of businesses receiving $20,000 to $30,000.

Small businesses also benefit from…

  • NO application fees
  • NO out-of-pocket expenses
  • NO fixed monthly payments

Merchant Cash Advance is an unsecured commercial loan. The prerequisite to getting approved is a minimum record of credit card sales receivables for 1 year and having been in business for atleast 2 years. Good credit scores are preferable, but a bad credit score does not disqualify you for the advance. The business cash advance lender purchases a percentage (10%-25%) of your future credit card receivables for a fixed flat rate. The business cash advance company gets paid back immediately following the batch process that occurs regularly during credit card processing. The credit card receipts are sent electronically from the merchants credit card terminals to the credit card processors back office system, which is programmed to perform split processing where a percentage of the payment is sent to the merchant’s bank account and a percentage to the merchant cash advance company’s bank account until the payback amount is reached. The duration of the merchant cash advance can vary from 6-12 months or longer if you have worked with the business cash advance lender before.

The factors that really work for you with a business cash advance are – quick approval cycle with minimum paperwork; amount credited into your account within 2-3 days or a week max; no collateral or personal guarantors; no fixed installment dates; no late fees.

You get the money when you need it most, with no questions asked. You can use it as working capital, to fund expansion, an acquisition, pay off debts, anything and everything you plan to get your business out of the doldrums.

In summary, work with reputed business cash advance companies to give your business a fair chance as we emerge from this deep recession. Make sure you review the MCA contract carefully and understand the fine print to avoid any surprises.

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Down and Out In Business

Thursday, January 7th, 2010

Every business has been affected by the recession. As 2009 ends and 2010 commences, the situation is improving gradually. The road that lies ahead is still a tightrope for businesses balancing low finances, productivity and profit margins. Small businesses, that even in a good time have limited cash flow, have been dealt a crushing blow.

But as they say, every cloud has a silver lining. For small businesses, that lining is business cash advance. Business cash advance or merchant cash advance (MCA) is a viable financing option that any business with a fairly good credit card sales record can take advantage of in this economy. Small Business loans and bank loans have become an impossible contrivance for small business owners on shaky ground. An immediate need for funds, a possibly bad credit score, low approval rates, an indefinite progress plan, the fear of losing collateral, stringent rules and high interest rates are making more and more business owners turn from commercial loans to business cash advance.

MCA is a “no questions asked” unsecured advance of money that is more a purchase than a loan. An MCA provider purchases a percentage of future credit card sales for an amount of money that is advanced to business owners to use as they please. Approval rates are high. The advance is transferred to the owner’s account in 2-3 days. There is minimal paperwork and collaterals are not required. The business cash advance companies  recover the money by getting a cut of the monthly credit card sales, be it high or low.

Thanks to the recession, the relatively high interest rates of a MCA have become comparable to the hiked up rates now charged by banks. Heck, if you have to pay the same why not go for the option that invests in your future rather than delving into your past.

MCA providers have risen as the heroes of the present time, keeping businesses afloat and helping rebuild the economy of the country. MCA industry leaders are working together to regulate business practices to weed out unsavory players and ensure the continued growth and popularity of business cash advance.

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Hope Is In The Air

Thursday, December 31st, 2009

Small businesses in America sustained more than 50% of the private work force of the country. The recession pretty much knocked the wind out of the sails of countless small businesses and their employees. The situation worsened with banks and traditional finance sources hiking up interest rates and even refusing loans to struggling business parties.

So, does this slump mark the end of the road for small business players? Will the market be the exclusive playground of big industry giants? Absolutely not. The business world is all about highs and lows, survival, and evolution of new players. While the recession has traditional finance sources retreating into their self-protective shells, business cash advance providers have risen to the occasion to support small businesses.

Why business cash advance and not small business loans?

For starters, business cash advance companies, unlike their banking peers, focus on the future of the business rather than its past. They buy future credit card sales of the business for the advanced amount.

The following features highlight the benefits of business cash advance ( also known as merchant cash advance) over commercial loans:

  • Approval in 24 hours or less
  • Minimal documentation
  • High approval rate (almost 90%)
  • Quick transfer of funds (3 days to 1 week)
  • Low credit scores not a problem
  • Collaterals not required
  • Performance based recovery

With business cash advance, business owners are freed from the stress of making enough to pay fixed installments or risk losing collaterals. The earnings of business cash advance providers ride on the sales of the business. If the business does well in sales, the provider earns more. If not, the provider earns less too. No pressure.

The merchant cash advance industry is maturing and organizations such as the North American Merchant Advance Association (NAMAA) are trying to regulate the industry by weeding out unsavory players. While small business owners should consider merchant cash advance for their business, they must examine the provider’s services and rates carefully to ensure the provider is not cashing in on their need.

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Some Easy Ways To Beat The Recession

Wednesday, December 30th, 2009

The recession hit small businesses with the force of a tsunami, wiping many off the map and leaving the rest in deep waters. Though the recessional environment is a tough time for small businesses, they should not give in without a good fight. Here are some suggestions for small businesses to pull their business out of financial jeopardy:

1. Apply for a business cash advance

Any business plan needs the backing of finance. Business cash advance is an ideal option that promises quick funds with minimum paperwork and hassle. Unlike small business loans, business cash advance has a performance driven recovery policy, asks no questions on how the advance will be used, does not make good credit score a criteria for approval and does not require collaterals. Even the interest rates of small business loans and business cash advance are at par because of the recession’s effect on bank loans.

2. Develop a customer friendly website

Small businesses cannot afford not to have a website. A large percentage of internet users fall in the 30-60 age bracket and use the internet as a serious business tool – searching for deals, best performers and cost-effective products and services. Professional website designers and developers can build a business website using latest technology, and save on costs and time. The website can include a description of the business, its products and services, testimonials, news and information, links to forums and blogs, and contact information.

3. Incorporate credit card processing

Small businesses can increase their revenue many times over during the economy slump by incorporating credit card processing facilities on their brick-and-mortar and e-commerce stores. Due to the lowering of credit card processing rates, credit card payments are gaining popularity with customers and businesses. Credit card processing companies can get you started by installing point-of-sale terminals, setting up merchant accounts, incorporating security features to protect against credit card fraud, setting up payment gateways for e-commerce applications and more.

Simple measures can have far reaching effects. Take timely action to maximize profits in an unpredictable economy.

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