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A Merchant Loan Isn’t Really A Loan

By Daniel Samoohi

There are many routes to get working capital for your business, but not all of them involve a bank loan. A merchant loan is actually a type of factoring. Factoring is a method whereby a business sells its anticipated credit card sales to a third party – the factor – at a cheaper rate in exchange for cash with which to fund the business immediately.

In today’s working climate it is no secret that many new businesses are having a very hard time getting normal business loans through a bank. The banks are extremely tight-fisted with their funds at the moment. Luckily merchant loans via factoring agreements are still available and the qualifications are much less tough than those located at the local bank.

To obtain a merchant loan, many companies require a business to have been in operation for at least a year and accepting credit cards for at least 6 months. Since repayment of the funds is directly tied to credit and debit card receipts, evidence of this income is also required.

A piece of these future credit card sales is agreed upon as the daily repayment capture, easing the financial hardship for the company during a slower period. Unlike a conventional small business loan, the daily capture feature allows business owners to pay back at their own pace instead of being liable for set monthly payments that could result in the business going out of business.

Because this money is not acquired in a traditional loan, if the merchant fails to meet the conditions of the agreement, for example, using different credit card services to process payments, they are still held personally responsible for the balance.

Nevertheless, for a large number of young businesses, this form of attaining funds is still the best. Flexible repayment terms, fast access to needed funds and less cumbersome acquisition of said financing, makes a merchant loan a smart option for many business owners.

Since early 2008 Daniel Samoohi has helped thousands of business owners find reputable providers in order to compare offers for a merchant loan. He also aids start ups as well as established businesses find great deals for merchant accounts in order to accept credit cards as a payment method for their businesses.

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Article Citation
MLA Style Citation:
Samoohi, Daniel "A Merchant Loan Isn’t Really A Loan." A Merchant Loan Isn’t Really A Loan. 2 Jul. 2010. 17 Sep 2014 <>.

APA Style Citation:
Samoohi, D (2010, July 2). A Merchant Loan Isn’t Really A Loan. Retrieved September 17, 2014, from

Chicago Style Citation:
Samoohi, Daniel "A Merchant Loan Isn’t Really A Loan"

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