Well, Small Business Owners, the banks won’t lend, the suppliers won’t credit, and your cash capital is…or is it?    

Since the downturn in the economy, banks haven't been lending, at least not to the ones who need it. The “big” bailouts for the “big guys,” and the go ahead from the "Powers that Be" to release funds -- get money circulating back into the economy again -- but what about the ones responsible for making them the “big guys,” and who have always played a major role in stimulating/maintaining the economy in the past – what about the “little guys?” When will small businesses get what they deserve? 

According to a recent article on CNNMoney.com, titled "A grim year for small business lending"..."The SBA Loan volume plunged 36% in 2009 as banks slammed their vaults shut to small businesses."  In an October 13, 2009 New York Times article, PETER S. GOODMAN stated that "Lenders are waiting to take losses in commercial real estate and credit cards before loosening up money."

Well, move over banks, investors and loan officers! Enter Merchant Cash Advance companies. There is a new alternative to the high-interest business loans that banks so graciously offer the drowning small business merchant. It is known as a Merchant Cash Advance, or Business Cash Advance. No longer do you have to prove you don't need a loan in order to qualify for one! No more searching attics, pulling old hard drives, or the like trying to track down old -- and now irrelevant -- tax records, statements, or credit references from the same companies you now need a loan to pay in a grueling attempt to satisfy all the bank’s loan requirements before even being considered. Only to realize in the end that all your efforts were for naught. In fact, 90% of small businesses do not even qualify for a business loan.

There is hope for the small businesses fighting to stay above water until the storm passes. There are companies out there holding lifesavers just waiting for you to claim yours!

For a no-interest, no-waiting, hassle-free avenue to immediate cash capital, all merchants have to do is provide the last 3 - 4 months’ Visa and MasterCard receivables statements. Most require that the business have at least 3k+ per month in CC receivables (but there are a few who claim to advance for less than that). Advance amounts are based on past credit card receivables and repayment amounts based on future credit card receivables.

The amount of the advance is based on the average monthly credit card receivables -- usually 3x – 4x that amount. These advances range anywhere from $3,500 to $600,000 and are wire transferred into the business account within 7- 10 days with some even sooner if you happen to use the same credit card processor.

Any businesses that do happen to qualify for a business loan would be hard-pressed to qualify for comparable amounts. Not to mention the added on interest, especially if you get behind on payments during slow months. Not so with a merchant cash advance.

With a merchant cash advance, repayments are based on future Visa and MasterCard receivables.  This means that the lender doesn’t get paid unless the merchant does. A small percentage of the businesses Visa and MasterCard sales at the end of each month (this percentage varies from lender to lender and sometimes business to business) is taken as payment each month on the cash advance until the debt is satisfied.  On average, most advances are paid off in about 8 – 10 months, at which time a lot of businesses opt to do it again.   

Since payments are based on a percentage of sales made, merchants are able to have more control over the cash flow, especially during slower months. There is no fixed payment schedule, no expected cash payments, and no fixed payment amount, so that during those slow months merchants don’t have to fret about being able to keep up a payment that may have been feasible before, but ending up another financial strain later.

As with any business dealing with money, there are those out there who add their own little twists to feed their greed. Those are the ones you need to run from. Listed below are some of the red flags to look out for when dealing with a cash advance lender.

********BEWARE OF CASH ADVANCE PROVIDERS WHO REQUIRE:
APPLICATION FEES --- THERE ARE NO APPLICATION FEES!!

PERSONAL GUARANTEES OF REPAYMENT -- IT IS NOT A LOAN!!

COLLATERAL -- AGAIN, THIS IS NOT A LOAN!

PURCHASING OF THEIR CREDIT CARD PROCESSING EQUIPMENT OR SERVICES--- THIS HAS NOTHING TO DO WITH A CASH ADVANCE.

IT SHOULD NOT MATTER WHOM YOUR SERVICE OR EQUIPMENT IS WITH.

Note: You will find that the majority of Merchant Cash Advance Lenders are also payment-processing companies who not only want to be your lender, but your credit card/payment processor as well. While it is a plus for the lender, it should not be a prerequisite.
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