A Merchant Loan for the Lone Merchant
March 8, 2010scfm 11 Comments »In 2007, there were over 27 million small businesses in the United States and many of those small businesses were in the retail, service and/or food-service industries. Taking into consideration that some of these retail businesses may be products of a single owner, there is still sound reason to believe that there is a considerable amount of retail owners in the United States. But even with hundreds of thousands of colleagues, being in a financial rut, not knowing if one’s business will make it through the off-season, or wanting to expand but lacking the funds to do so, can make a retail owner feel pretty lonely.
For the multitude of retail businesses in the U.S. and their owners, the merchant loan is like a rescue helicopter landing on a deserted island. It can take your financial worries, fears and shortcomings and turn them into the relief in knowing that business financing is possible.
But what type of merchant loan is best for your specific type of business? That is a question that only research and sometimes trial and error can answer. Some of the different merchant loans that are available are bank loans, equipment leasing and venture capital.
There are obviously various types of merchant loans but there is only one type of merchant loan that takes your business’s future credit card sales and turns them into cold hard cash today! With the merchant cash advance, small business owners in the retail and/or service-oriented industries can receive funding for their businesses from $5,000 to $500,000.
These funds can be used for anything the business owner feels will help his/her business. Why is this merchant cash advance more convenient than the other types of merchant loans?
1. Looser Requirements
Eligibility for a merchant cash advance depends mainly on the amount in credit card sales that a merchant processes. As the amount in monthly processed credit card sales increase, so does a merchant’s possible funding amount.
The merchant cash advance is completely unsecured. Therefore, even if a merchant has no collateral, he/she may still be eligible to receive a merchant cash advance.
Looser requirements also mean more merchants can be eligible to receive a merchant cash advance.
2. Renewals
The merchant cash advance can be renewed approximately every three to four months. Merchants are allowed to renew their advances as many times as they please. This comes in handy for many merchants because it allows them to have business funds available to them at all times.
3. Fast Funding
Most methods of business financing take a considerable amount of time to actually come through for a merchant. The application, review and funding processes of other types of business funding methods can last longer than a merchant would wish. But with the merchant cash advance, small business owners can be approved in 48 hours and funding can occur as little as ten business days.
4. No Restrictions
Merchants who chose to use a merchant cash advance as their source of business financing are allowed to use their funds however they please. This means, merchants can have funds to increase working capital, update equipment, increase advertising, renovate, etc.
Merchant cash advance lenders will not ask a borrower to write out a business plan or develop a presentations outlining how the money will be used. The decision of how to use the funds is left completely up to the business owner.
5. Automatic Repayments
Merchant cash advance repayment procedures differ greatly from other types of merchant loans. The merchant cash advance lender will automatically deduct a small percentage from a business’s daily credit card sales until total payback is completed. This payment method allows payback to go with the flow of business, which is very convenient for those working in the retail/service-oriented industries.
With the availability of the merchant cash advance, merchants can get a loan so they no longer have to feel alone when it comes to business financing.
Question about merchant loans
On merchant advance loans, does the % they take out of your bank account….?or do they take it out of the Visa and Mastercard money BEFORE if shows on bank account? Im trying to find out if it shows the deductions on the bank account as a transaction? Help!
Tags: Business Cash Advance, Business Loans, Merchant Cash Advance, merchant loans, Small Business Loans
Posted on March 8th, 2010 at 6:58 am
This is a very legitimate way to get funding for your business. I would recommend looking into another merchant service provider than the one you have. The reason for this is that most merchant account companies will lower your current rates to get the new business. Most Merchant account funding providers are very similar. So I wouldnt worry to much about that side of things.
Since you will be loosing a portion of your daily deposits to payback the funds, I would look at offsetting that cost by getting my merchant account fees lowered.
This company will help you get lower rates and a great merchant funding program.
http://www.omnitranz.com/businesscapital
Hope that Helps! Good Luck !
Posted on March 8th, 2010 at 7:23 am
The funds are deducted before they take the deposit into your account. That way they are sure they get their money and don't have to worry about the funds being available when they go to ACH it out of your account.
Posted on March 8th, 2010 at 7:46 am
very cool video i must say. I made sure add you to mu channels also. hey if anyone wants some more info on cash advances here is a great site to read gauranteedcashadvance(dot)com
Posted on March 8th, 2010 at 6:47 pm
The most common type of lender is the commercial bank, credit union, savings and loan companies, or investment companies. These lenders offer business loans, however, often times these loans must be secured. This could mean offering up your personal assets as collateral<!–Although, the business is yours to do with what you want, these loans are very risky to any un-established business. And that’s assuming you qualify. Unsecured loans, usually less than $100,000, are available to business owners based upon his or her personal credit history.
http://best-loans.awardspace.com/businessloans.htm
Commercial banks may also request that a business have a co-signer or guarantor. This may mean finding a financial partner or checking into the various types of small business loans available through the federal government. Women and minorities have an even wider selection of entities–>willing to loan them business capital. Organizations such as the Women’s Business Ownership, Women Entrepreneurship in the 21st Century, and several others cater to lending money to women that wish to start-up a business, still others actually guarantee them business loans.
Posted on March 9th, 2010 at 12:30 am
0.1125 troy ounce and of .986 pure gold, about 2 dollars in 1900,about 70 dollars today.
Posted on March 9th, 2010 at 10:22 am
The international economic financial system is collapsing because it has a logic problem in its design. As this fact was not accepted by the elite,people is paying now the consequences.
A few of the medium class will buy a piece of land and buy a manufactured house using credits giving by the manufactured houses companies, and most of the people will be reenters forever.
People who works in the loan and construction business will loss their jobs.
The economy status of USA is in a big trouble and banks and houses are only the top of a big iceberg that affects the entire world.
Posted on March 9th, 2010 at 10:59 am
ans: $717.35
——————-
explanation:
—————-
monthly interest rate i = 1% = 0.01
let us agree to call (1+i) = 1.01 as r to match with GP nomenclature
and assume payments at end of month
also, let L = loan amount
and n be the amortisation period in months.
L will become L*r^n at the end of n months
so payment stream must also be equivalent
let p be the monthly oayments, so value after n months
= pr^(n-1) + pr^(n-2) + ….+ pr + p
sum of this series is p(r^n – 1) / (r-1)
so p(r^n -1) / (r-1) = L*r^n
or p = L*r^n*(r-1) / (r^n -1)
substituting the numerical values in the formula derived,
p = (50000*1.01^120)*.01 / (1.01^120 -1)
= $717.35
Posted on March 9th, 2010 at 3:58 pm
Create or join a local meet-ups network group for small business and entrepreneurs. Become a small business expert. Start your own blog offering advise and tips to business owners looking to expand. Attend chamber of commerce meetings. Make yourself visible in your community. Be interested in more than the loan. Be interested in the people and their businesses. Be credible, and sincere, you will get referrals that way. It is all about the relationships you develop and cultivate.
Posted on March 10th, 2010 at 9:18 am
Pros and Cons…
Pros:
Its regarded (today) as off-balance sheet financing
Its open to those with below average credit scores (cash flow vs. history review)
Its fairly quick and easy to process.
Zero liability – no recourse if the business goes under (typically)
Cons:
These types of 'factoring' equate to HUGE percentage rates – and although they will forcefully tell you its not comparable to a loan with an APR% – the bottom line is they average between 60% – 125% APR in hindsight.
Quicksand – often those involved in these types of advances – keep rolling over the advances (they take a certain percentage of your merchant processing receipts – and often require you to use their processing service so they make money there too, and when you pay down the advance – you are so behind, you end up doing it all over again).
This type of factoring utilizes "unearned income" from an unknown source – which is usually categorized as part of an 'equity' account on the balance sheet… If the oversights of the industry ever reorganize this type of lending to be 'on-balance sheet' financing – it could impact businesses and owners substantially (from a reporting & historical / credit rating standpoint).
In the end for a 5,000 advance, you will likely pay back 1500 per month (held back from your merchant account funding) for 6 or more months. Its expensive money, but if you have nowhere else to turn – its your (last/best) option.
Posted on March 11th, 2010 at 3:55 am
Super Planet, I think you'll have a hard time, bad credit hurt many people in so many ways. http://www.americaschoicetoday.com/Payday-Loan.html
Posted on April 9th, 2010 at 11:54 pm
This is a good,common sense article.Very helpful to one who is just finding the resouces about this part.It will certainly help educate me.