Why a Business Cash Advance isn't a Loan

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There are many routes to get financing for your business, but not all of them involve a traditional loan. A business cash advance is really a form of factoring. Factoring is a method whereby a company sells its future credit card receipts to a factoring company - the factor - at a cheaper rate in exchange for working capital with which to fund the business immediately.
In today's working climate it is no secret that many new businesses are having a very hard time getting approved for normal business loans through a bank. The banks are overly tight-fisted with their capital at the moment. Fortunately business cash advances via factoring agreements are still available and the requirements are considerably less tough than those found at the local bank.
To attain a business cash advance, many factoring companies need a business to have been in business for at least a year and accepting credit cards for at least 6 months. Since repayment of the working capital is directly tied to credit and debit card receipts, evidence of this income is also required.
A percentage of these future credit card receipts is agreed upon as the daily repayment capture, easing the financial burden for the business during a slower period. Unlike a conventional small business loan, the daily capture feature allows business owners to pay back at their own pace instead of being liable for fixed monthly payments that could result in the business going out of business.
Because this working capital is not attained in a normal loan, if the merchant fails to meet the requirements of the agreement, for example, using different merchant accounts to receive payments, they are still held personally responsible for the balance.
However, for many start-up businesses, this type of attaining funds is still optimal. Flexible repayment terms, fast access to needed cash and less cumbersome acquisition of said financing, makes a business cash advance a smart option for many business owners.

Article Source: http://depositarticles.com/

Since early 2008 Daniel Samoohi has aided thousands of business owners in finding credible lenders in order to compare quotes for a business cash advance. By making lenders compete with each other, Daniel also aids businesses in finding great deals for business cash advances.

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