Business Working Capital, Business Cash Advance

We offer short term, unsecured working capital, from $7,500 and up to $250,000.

This web page is a comprehensive overview of the program. It is wordy, but if you invest 5 minutes to read it, you will know if this is right for your business or not.

You may have already been exposed to these types of unsecured small business loan programs before, and we highly recommend that you thoroughly understand how they work before you get serious about it. The repayment period or can be short, relative to bank loans, which if not properly managed can have a negative impact on cash flow. There are other negatives to the program as well, but this is the main one, for the majority of businesses. We discuss the other negatives below.

We are going to outline how the program works and then discuss the pros and cons of it. If after reading this, you feel that it maybe of interest to you, we welcome your phone call and will assist you in setting it up.

Overview of How This Working Capital, Business Cash Advance Program Works

Interestingly the program is not considered a loan, but rather an advance based on your future credit card sales. You are essential selling your future credit card sales, at a discount. It is similar to Accounts Receivable Financing, if you’re familiar with that type of lending, but this is tied to your credit card sales only. After an advance has been made, and a repayment schedule has been agreed upon, the advance is paid back on a daily basis, and debited out of your merchant account.

The loan amount is determined primarily off of your historical gross credit card sales. The ratio is generally 1.25% of your gross monthly sales. So if you do $100,000 a month in credit card sales, you should qualify for around a $125,000 small business cash advance.

The retrieval period (or repayment period) is based off your daily credit card sales as a percentageof it. The percentage is a negotiable item. But say you agree upon a 7% retrieval period and you do $100 in credit card sales for the day. $7 would be debited out of your merchant processing account when you settle your “batch” (referred to as “batch splitting”) at the end of the day.

So again, cash is credited to your bank account, than you pay it back on a daily basis when you settle your credit card batches. The amount of cash you receive is based on your gross monthly credit card sales.

Pros and Cons Small Business Working Capital

Pros:

Virtually no underwriting is required. Money can be advanced within days. The application process compared to bank financing is a breeze. The primary underwriting consideration is 1. Have you been in business more than one year? And 2. Do you gross over $5,000 per month in credit card sales? If no to either of these it’s a non starter.
The repayment period is based of off your daily sales, as a percentage of it, not a set fixed amount. So if you have a slow day in terms of gross sales, your payment is lowered. This can be a big benefit to seasonal companies or other businesses that have unpredictable sales.
No “use of proceeds” restrictions. Compared to commercial bank financing this is a huge benefit as the few banks that are still doing working capital type loans, want to scrutinize exactly what you are doing with the money. SBA loans for example are notorious for doing this. With the advance, you can do whatever you want with the money – with no reporting.
Unsecured… No collateral required, whether personal or business assets.

Negatives

As mentioned, the retrieval period is shorter than most loans. Many borrowers are use to amortization schedules spread out 5 – 10 years. This is a totally different type of program as it is not a loan, but a rather you are selling your future sales at a discount. Regardless of the terminology, the shorter payback period can have a negative impact on your businesses cash flow. You need to be certain that you can handle the level of repayment that you agree to.
The discount that your selling your future sales at is expensive. You’re generally agreeing to a 20-25% discount of your future sales. However you have to compare this to your ROI on the cash. We see business owners using this cash to take advantage of opportunities or to deal with problems that need to be addressed quickly. For example say one of your competitors goes out of business and you have a chance to buy their inventory at 70% off. However you do not have a enough cash on hand without the advance to take advantage of it. The savings on this purchase, will far out way the cost of the capital through the advance.
In general you would have to switch credit card processing companies to us. Though this may actually be a good thing as we have extremely competitive costs for this, as well as a direct, single point of contact type approach, some customers just don’t like the idea of switching.

Is this right for you? Let us know if you would like to discuss at the number below.

248 885-8797

Fill out our Contact Us/Get Started Form.

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Business Working Capital, Business Cash Advance

Overview of How This Working Capital, Business Cash Advance Program Works

Pros and Cons Small Business Working Capital