Some may think that a small cash advance is a loan, or similar to it, but it is neither. It is a cash advance secured by a business’s future credit card sales. It is a life saver for many businesses in their economic struggle. Without the availability of capital, many businesses will fail. A lot of businesses are struggling now due to the economy. Consumers are not buying as much as they were last year. The economy will get a boost again, but businesses need to have cash to keep their businesses afloat till the storm passes by. This is where a small business advance would come into play.
A business can get a cash advance by this method without needing collateral or good credit. When businesses go to a bank, they are generally turned down if they have bad credit or have not been in business for at least 2 years. Also, when a business needs money, they need it sooner rather than later and when they go to a bank, it can be quite a lengthy process. Plus banks ask for a fee to apply for a loan. When a business goes through a company who offers a small business advance, they can get their loan quickly and without paying any fees upfront.
Many businesses, especially restaurants suffer losses when the economy slows down because people do not go out to eat as often as they did before. Some of these businesses may need a boost to get through this slow time. Many small businesses just opened for business and then the economic hit a downfall. Their needs may be different than that of restaurants, but all businesses depend on capital to succeed. Any business seeking this type of advance should keep in mind that it is a small business advance, unsecured, and not a loan. It should be considered to be a business transaction.
This type of cash advance will be paid back by the business’s future credit card sales. There is no promise made by the business owner to pay it back, per say. Let’s say that, in the future, if the business were to slow down, maybe even fail. In the event of the business slowing down, the percent of credit card sales in the previous repay agreement will lower. If the business were to fail, the advance would not be paid back. If the business does well and continues to have monthly credit card sales, then the percent of sales for each month will be applied to the small business advance that was acquired.
In today’s market, having funds to run a business is very important to each business owner. Being able to go and get this type of advance is a life saver for many businesses, especially for those businesses that have only been in business for a year or so, and those that do not have perfect credit.