Cash Advance Merchant Services

Cash Advance Merchant Services

Businesses needing quick financing are turning to cash advance merchant services to get loans against future credit card receipts. Cash advance services fill a gap in the financial services business. Loans, factoring, and credit lines arent viable in all circumstances for all businesses.

Cash Advance Merchant Services Have Their Place:

Some businesses have ready access to cash or credit. Those businesses arent likely to need short-term loans or cash advances against invoices or credit card receipts.

Certain business situations make those sources of money unavailable. Some businesses have weak credit and cannot rely on a business line of credit. Other businesses may not have enough collateral to secure a bank loan. Many small and medium businesses dont own their major assets, construction equipment or vehicles for example.

In emergencies banks and credit unions may move too slowly, or may not be able to accept the risk associated with making a loan. A used car business with a repair and parts shop might suffer storm damage and see business plunge because of the storm. Insurance money isnt going to come quickly, or cover all the companys expenses. A cash advance against credit card receipts might be needed.  

Using Cash Advances Wisely:

Some circumstances call for quick access to money. Know the risks and benefits of getting a cash advance. Merchant cash advance services are like all other business services. A cash advance is meant to fill a specific need, not to be a standard financing tool.

As with payday loans, cash advances can be expensive. The premium a merchant cash advance firm requires may add up to an effective interest rate of over 100% a year. If the advance can be paid off quickly, the advance will cost much less. In some circumstances, the cost of not getting an advance could be much higher.

Emergency spending and disaster recover are not the only two uses for merchant cash advances. A business might need more money to act on a marketing opportunity or a short-lived opportunity to acquire equipment at a bargain rate. In those cases it might be reasonable to use a small cash advance, at least for part of the money.

Potential lenders are easy to find online. The wise business owner will investigate both the reputation of the lender and the expertise of the lender. Some experts recommend using a cash advance firm with experience in the relevant industry. In all cases, using a brick-and-mortar lender instead of a Web site is better. Most scams and complaints seem to come from unregulated online lenders.

Know How Cash Advances Work:

Use a qualified lender and know the relative costs and benefits of getting an advance against credit card receipts. If other financing options are not available, cash advances can be useful in riding out a crisis or exploiting an opportunity. Merchant cash advances should not be used for covering routine business expenses. Cash advance merchant services can be valuable partners for a business that lacks ready access to regular financial institutions.