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Business Cash Advance – An Easy Method Of Raising Cash For Your Business

By Daniel Samoohi

A Business Cash Advance is becoming increasingly prevalent in today’s society. The existing economic status and tight credit needs are major contributors to the increase in cash advances. It is hard for merchants to get the funds that is necessary with the increasingly stringent stipulations for regular business loans. Business cash advances are a different means of obtaining funds for day to day business requirements. So how does a business cash advance function? Let us explain

Business cash advances are a service provided by a financing company to a small business owner that receives credit cards, most commonly in the retail or restaurant industry. The merchant loan funding agent basically advances the merchant a prearranged sum of cash in exchange for a part of their future credit card sales.

For example, let’s take Jo’s Diner. Jo may not have adequate cash available to pay his employees or to buy new appliances for his kitchen. Say Joe wants thirty thousand dollars and he contacted a Merchant Loan lender for the funds.

The lender would look at Jo’s previous credit card statements and find out if he can be approved for the advance. They would figure out an interest rate for the funds advanced. The rate is most commonly higher than a conventional business loan because the advance is usually given to entrepreneurs that don’t have the credit or collateral to get funds from a traditional bank. If the cost for Jo’s advance is thirty percent then he would be getting the thirty thousand dollars and paying the agent thirty nine thousand dollars in future credit card revenues.

The lender would collect the nine thousand by taking a part of the daily credit card volume the business charges. Say the portion the lender takes is 8% of daily credit card volume and the business received $10,000 in credit card transactions for the day. The merchant cash advance agent would take $800 (8% of the $10,000). This process would continue until the lender received the full $39,000. This payment process goes up and down with the cash flow of the business. The percentage will be the same so if your business has a bad period, you will be paying less. This is a huge selling point for the advance service. Normal bank loans have a fixed payment amount, which could be hard to pay during slow times. A merchant loan has the feature to follow fluctuations in business cash flow.

A business cash advance is a important substitute to a business loan. Some will think nine thousand dollars is a steep fee to pay but the conditions a merchant must meet for a regular loan is becoming increasingly hard to obtain. A business cash advance is a way of getting immediate and easy money to meet business working capital needs.

Dating back to early 2008 Daniel Samoohi has helped 1000′s of business owners in finding reputable providers in order to compare offers for business cash advance. By making lenders compete with each other, Daniel assists businesses in finding great deals for a business cash advance.

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Article Citation
MLA Style Citation:
Samoohi, Daniel "Business Cash Advance – An Easy Method Of Raising Cash For Your Business." Business Cash Advance – An Easy Method Of Raising Cash For Your Business. 26 Aug. 2010. uberarticles.com. 4 Dec 2014 <http://uberarticles.com/finance/loans/business-cash-advance-an-easy-method-of-raising-cash-for-your-business/>.

APA Style Citation:
Samoohi, D (2010, August 26). Business Cash Advance – An Easy Method Of Raising Cash For Your Business. Retrieved December 4, 2014, from http://uberarticles.com/finance/loans/business-cash-advance-an-easy-method-of-raising-cash-for-your-business/

Chicago Style Citation:
Samoohi, Daniel "Business Cash Advance – An Easy Method Of Raising Cash For Your Business" uberarticles.com. http://uberarticles.com/finance/loans/business-cash-advance-an-easy-method-of-raising-cash-for-your-business/


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