Credit card factoring is an easy way to get the cash you need for your business. While you might not have heard this particular term before, you have likely heard of a cash advance. This type of funding works much like a cash advance but the money that is advanced to you is based on the credit card sales of your business.
Many small businesses have a difficult time finding money for business. This makes a cash advance the perfect solution for them. This does not mean, however, that both medium and large businesses cannot take advantage of the flexibility and convenience this funding option allows them. Indeed, many companies use cash advances in combination with more traditional forms of funding in order to stretch their budgets.
Because this cash advance is based on the credit card sales your business has for several months, it is necessary for you to accept credit cards. Typically a company likes to see credit card sales of between $1000 and $2500 per month for a period of six months before approving a cash advance. However, you should always shop around for the best terms and rates that meet the needs of you and your business.
You are likely to find that you need money for business quickly at some point in time when you own a small business. This can be a problem if you are forced to use a more traditional route to get the money you need. A wait of days, or even weeks, to hear if your application is approved as well as to actually receive the money is not unheard of.
With credit card factoring, however, you will hear an answer back about your application and receive your money within a few days if you are approved. This allows you to have much quicker access to the money so you can take advantage of sales to pump up your inventory or pay down some debt. Funds such as this are also great for getting through those unexpected expenses that tend to crop up when you least expect them.
Traditional bank loans almost always require you to have some sort of collateral in order to even be considered for an application. This can be a real problem if you have all, or most, of your assets already wrapped up in your business. With a cash advance, though, you do not need to have collateral of any sort. This form of funding is financed by borrowing against your future credit card earnings so collateral is not necessary.
Repayment is very different for a cash advance of this type when compared to a traditional bank loan. Instead of having a set amount that you must pay each month, the company who oversees the cash advances will withdraw a certain percentage of that month’s credit card sales as payment against the cash advance. While the percentage will remain the same each month, the amount that is paid toward what you owe will change from month to month.