Having a reserve of working capital is pivotal for a small business that’s just starting out. Unexpected expenses and unexpected opportunities crop up that may require financial wiggle room to help your business develop and grow. Particularly high-risk businesses demand a reserve source of funding. The question that often plagues small business owners is how to access means of additional funding.
How can I get cash for my small business?
Traditionally the common method for businesses to gain access to additional funding is through small business loans from banking institutions. However, in a credit-based economic system bad credit, or no credit, can cripple a young business as banks will be unwilling to lend.
An alternative source of funding is a business cash advance. A cash advance lump sum will allow your business the budget flexibility to maximize your growth and development prospects without having to apply through traditional banking institutions that require detailed history, credit ratings, and stable but often conservative business plan.
How do I get business cash advance funding?
Typically a credit payment processor company will be the source for a business cash advance funding. As a credit payment processor, these companies can easily facilitate the payment methods through electronic credit processing. Online services such as us here at First American Merchant can provide you a cash advance within five to seven days with an application process that facilitates ease of use for small businesses. The other option is other independent financing services that can offer the advance funding your business requires.
How do I make business cash advance funding payments?
There are three fundamental methods to paying back a business cash advance:
- Split withholding – Through integrated credit processing, the company that provided the cash advance will take a cut of each credit transaction processed by your business. This is automatic requiring minimal effort as your payments accrue over time as you transact your business.
- ACH withholding – With this approach your business will be responsible for removing the agreed upon percentage per transaction manually and then processing payment to the cash advance provider through ACH.
- Lock Box/Trust Account – Your business’ credit transactions through this approach will be automatically deposited into a trust account. Your cash advance provider will then be responsible for removing their percentage and transferring the remainder back to your business via ACH.
What do key details do I need to know regarding business cash advance funding?
There are several key facts you should be wary of before taking out a business cash advance funding. First, if you opt to make payment through a lock box or trust account, you will not be able to access the profit from you business’ transactions until your provider has transferred the money from your transactions back to you, which frequently takes an elapsed time of one day. This can become inconvenient and problematic for a small business relying on their retail sales.
Second, a business cash advance is NOT considered a loan and as such are not governed by laws regarding loans. This means a lot of the structure and security of a loan are not automatically included. So research your provider thoroughly and use only reputable cash advance providers.
Finally, you need to be wary of interest rates regarding your cash advance. As mentioned above, this form of funding is not governed by laws regarding loans. This means interest rates can be arbitrary. Be sure and clear regarding your interest rate and time frame for repaying your cash advance.
Acquiring business cash advance funding is not a difficult undertaking for a cautious and savvy small business owner. The importance of having working capital can make or break a small business where the margin of error is far narrower than for more established, larger businesses. In a difficult credit-based economy, a business cash advance loan can be the difference between folding or long term success.
Get Business Cash Advance Funding Today!