In the present age, acquiring the capital to set your business straight is a tedious job, especially when you are starting up. It is very tough to compete with existing experienced companies who have extensive market revenue. It is one of the main reasons why small businesses have their sales and cash drops drastically. Many of them are forced to close doors. However, there are others who have boosted their sales growth as well as set up more retail chains along with growth earnings per share. A small business heavily relies on these to flourish.
How capital is acquired traditionally?
Small businesses rely on commercial bank loans like SBA loans and other unsecured lines of trade. Whereas, large companies have access to public markets like the stock market, bond market etc. They can avail large capital to further expand their business. Prior to the 2008 recession, a lot of businesses faced financial crisis and ended up being shut down. Hence a lot of commercial banks have taken the initiative to aid small businesses with financial help. They are engaging in the easy money policy and generously lending small businesses their required capital. However, owners who have good experience of the market are always favored by the banks. A lot of these businesses have procured loans by unsecured commercial lines of credit. They have also availed industrial loans which require no collateral.
Merchant cash advance loans
Many small business owners look for cash flow for their existing business or them look for funds which will further expand their domain. There is a persistent capital vacuum in the market due to the current economic climate. Hence the businessmen have found out other ways of financing. They have considered alternate business financing by the use of merchant credit cash card advanced loans. The private investors offer small business investment loans. This merchant credit card advance loan offer significant advantages to the small businesses and their owners as compared to the tradional commercial bank loans. These are also known as factoring loans which are based on the average credit card volume or retail outlet. These are generally processed over a period of three to six months.
How is the repayment carried out?
The repayment can generally be carried out automatically by deduction of a pre-determined sum of money of each of the merchant’s credit sales in the future on a daily basis. The usual rate is of 20% of total credit card on a daily basis processed. Hence, the merchant will notneed to write any checks or send payments. The percent is fixed and will be deducted from the credit sales made in the future. The main advantage of the payment is that the cash advance made by the merchantwill not be reported on the report of the personal credit card.
A huge advantage of the credit card advance is that the approval will not need a personal guarantee from the owner of the business. Also, another advantage is that the merchant credit card advance does not need any additional security. Thus this could be the next big step in upgrading your small business and getting huge profits.