Credit card processing and business loan strategies are closely connected in many ways. Business owners should not overlook the substantial working capital benefits which will accrue to their business by effectively coordinating credit card factoring and credit card processing. These benefits will increase measurably if a number of common business cash advance and credit card processing problems can be successfully avoided.
Even the most successful businesses regularly need more financial resources than they can get via a working capital business loan. Perhaps the single most important commercial loan goal for any business is to successfully meet day-to-day cash requirements. This can be an impossible task if working capital is not properly managed.
The implementation of an appropriate merchant cash advance program has become an invaluable business financing strategy for businesses experiencing a shortfall of short-term cash. Despite the obvious urgency involved in meeting day-to-day cash needs, business owners should be prepared to deal with several potentially serious problems when they obtain a business cash advance via credit card financing and credit card processing.
Using Credit Card Receivables and Credit Card Processing
Most merchants have documented credit card processing activity and sales volume. This documentation of credit card processing activity and sales volume is a financial asset, since up to $300,000 can typically be obtained via a business cash advance based on future credit card sales and sales volume.
Suggested Business Loan Strategies for Common Business Cash Advance Difficulties
Before employing this strategy, businesses should realize that there are several recurring potential problems that they need to anticipate. Ten common credit card receivables problems that business owners should avoid when employing this strategy are highlighted below. Preferred/Recommended business cash advance requirements are shown after each potential credit card processing and credit card financing problem.
(1) Credit Card Processing and Credit Card Financing Obstacle to Anticipate and Eliminate: Closing costs required. Recommended and preferred credit card factoring requirement: Zero closing costs.
(2) Credit Card Processing and Credit Card Financing Obstacle to Anticipate and Eliminate: Fees charged up-front. Recommended and preferred credit card factoring requirement: Zero up-front fees.
(3) Credit Card Factoring and Credit Card Processing Difficulty: Collateral required. Suggested merchant cash advance and credit card receivables requirement: No collateral requirements.
(4) Credit Card Processing and Credit Card Financing Obstacle to Anticipate and Eliminate: Financial statements required. Recommended and preferred credit card factoring requirement: Financial statements required only for large business cash advances.
(5) Business Cash Advance and Credit Card Processing Problem to Avoid: Fixed payments to pay off the business cash advance. Preferred and highly recommended business cash advance requirement: No fixed payments.
(6) Credit Card Processing and Credit Card Financing Obstacle to Anticipate and Eliminate: Required to pay off the business cash advance over a fixed term. Recommended and preferred credit card factoring requirement: Fixed term for repayment not required.
(7) Credit Card Factoring and Credit Card Processing Difficulty: Two years or more in business required to qualify. Suggested merchant cash advance and credit card receivables requirement: In business for one year.
(8) Business Cash Advance and Credit Card Processing Problem to Avoid: high credit scores (680 to 700 or higher) required to qualify. Preferred and highly recommended business cash advance requirement: Credit scores of 500 or better.
(9) Business Cash Advance and Credit Card Processing Problem to Avoid: Maximum business cash advance of $10,000 To $50,000. Preferred and highly recommended business cash advance requirement: Maximum cash advance of $250,000 to $300,000.
(10) Business Cash Advance and Credit Card Processing Problem to Avoid: 12 to 24 months of documented credit card sales of $12,000 to $25,000 or more required. Preferred and highly recommended business cash advance requirement: 6 months of $5,000 or more.
Can the Business Cash Advance Problems Listed Above Really Be Avoided?
There are viable credit card receivables programs which avoid all of the problems described above. It is not necessary to accept any of these problems in order to obtain business cash advances based on future credit card sales.
It is not likely that all ten of the described obstacles will be pertinent for all business owners. Business borrowers are likely to experience several of these problems if they are considering a business cash advance that uses credit card factoring and credit card processing.
Copyright 2005-2007 AEX Commercial Financing Group. All Rights Reserved.
