In Search of Business Financing?
Posted by George Pirvu on Mon, May 31, 2010 @ 08:12 AM
In Search of Financing?
...when your Bank had to Say NO
By Robert J. Jacobs, Account Executive - Small Business Alternative Financing Specialist
There is a little known and under-utilized, short term financing facility that is available to small / medium size retail merchants. This type of financing is not a loan so it does not burden your financials. It is typically called a Cash Advance Program by the funding sources that offer them.
Cash Advance Program Overview:
The funding source offers financing to retail merchants by providing an advance on future credit card sales for the purpose of purchasing inventory, equipment, supplies, etc... If the retailer accepts credit cards as a form of payment, there is a high probability that they will qualify for this type of financing. Business owners with credit scores of 500 and higher are usually accepted. Based upon the results of a short due-diligence period, the merchant is advanced the funds to purchase inventory, equipment or supplies, etc., needed for their business. The funding cycle is typically 10 days or less for qualified businesses.
Typically, the merchant then has up to 6-months to pay off the advance through their daily credit card processing. The financing company, along with its credit card processor, manages the merchants processing and withholds a small percentage of the merchants credit card daily sales until the advance funding, plus a fee, is automatically paid to the funding source. This is a modified form of receivables financing, utilizing a merchant's cash stream from credit card sales as a means of automated repayment. In essence, cash is advanced to the business, and an automated system is set up to repay the cash advance through withholding from credit card transactions - repaying a small portion of the cash advance every time a customer makes a purchase.
The fee is based upon: credit worthiness, length of time in business, length of lease, monthly credit card volume, average monthly sales volume and past business history. No application fees. No points. No catches. No personal guarantees or UCC-1 filing. Pre-approvals usually within 24 hours.
Does Your Business Qualify?
Qualifying for a $15,000 to $350,000+ advance on future credit card sales is easier than you might think:
1. Do your customers use credit cards to pay for their purchases?
2. Have you been in business for at least 3 months?
3. Can you provide current merchant processing statements from the past 3 months to confirm at least $5,000 per month in credit card sales?
4. No open tax liens, judgements or bankruptcies?
5. Acceptable business credit?
6. Good standing with business landlord with at least 1 year remaining on the lease?
Summary
This is an innovative system of funding, designed especially for the small retailer. If the business owner does not qualify for a line of credit with the bank, or has maxed out their existing line of credit with the bank, or wishes to preserve their line of credit with the bank, this type of funding program is available to nearly any business that has been open at least 3 months with monthly credit card sales averaging at least $5,000.
Robert Jacobs is an Account Executive with Compound Profit. Mr. Jacobs helps small to medium size business owners get capital for growth and cash for operating expenses... when the bank has to say no. Visit his web site at http://www.cprofitrj.com for more information. He can also be reached at (877) 386-3716, ext 134.