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Credit Card Processing - Business Cash Advance Problems to Avoid

By: Stephen A. Bush Credit card processing and business loan strategies are closely connected in many ways. Business owners should not overlook the substantial working capital benefits which will accrue to their business by effectively coordinating credit card factoring and credit card processing. These benefits will increase measurably if a number of common business cash advance and credit card processing problems can be successfully avoided.

Even thriving small businesses frequently need more cash than they can borrow from a bank. One of the most important commercial financing needs for any business is ensuring that short-term cash requirements are successfully met. This is frequently a difficult task.

The implementation of an appropriate merchant cash advance program has become an invaluable business financing strategy for businesses experiencing a shortfall of short-term cash. Despite the obvious urgency involved in meeting day-to-day cash needs, business owners should be prepared to deal with several potentially serious problems when they obtain a business cash advance via credit card financing and credit card processing.

The Use of Credit Card Processing and Credit Card Factoring

Most merchants have documented credit card processing activity and sales volume. This documentation of credit card processing activity and sales volume is a financial asset, since up to $300,000 can typically be obtained via a business cash advance based on future credit card sales and sales volume.

Suggested Business Loan Strategies for Common Business Cash Advance Difficulties

Merchants should be aware that there are at least ten serious difficulties that they need to be prepared for before obtaining a business cash advance. These problems are described below to help businesses avoid these common merchant cash advance and credit card processing obstacles. After each potential problem is described, a suggested credit card processing and credit card receivable factoring solution is provided.

(1) Business Cash Advance and Credit Card Processing Problem to Avoid: Closing costs. Preferred and highly recommended business cash advance requirement: No closing costs.

(2) Credit Card Factoring and Credit Card Processing Difficulty: Initial up-front fees. Suggested merchant cash advance and credit card receivables requirement: Up-front fees not required.

(3) Credit Card Processing and Credit Card Financing Obstacle to Anticipate and Eliminate: Collateral required. Recommended and preferred credit card factoring requirement: No collateral required.

(4) Credit Card Factoring and Credit Card Processing Difficulty: Financial statements required. Suggested merchant cash advance and credit card receivables requirement: No financial statements required except for larger business cash advances.

(5) Business Cash Advance and Credit Card Processing Problem to Avoid: Fixed payments to pay off the business cash advance. Preferred and highly recommended business cash advance requirement: No fixed payments.

(6) Credit Card Factoring and Credit Card Processing Difficulty: Pay off the business cash advance over a fixed term. Suggested merchant cash advance and credit card receivables requirement: No fixed term for repayment required.

(7) Credit Card Processing and Credit Card Financing Obstacle to Anticipate and Eliminate: Several years in business required to qualify. Recommended and preferred credit card factoring requirement: one year in business.

(8) Business Cash Advance and Credit Card Processing Problem to Avoid: high credit scores (680 to 700 or higher) required to qualify. Preferred and highly recommended business cash advance requirement: Credit scores of 500 or better.

(9) Credit Card Factoring and Credit Card Processing Difficulty: Business cash advance limited to $50,000. Suggested merchant cash advance and credit card receivables requirement: Maximum cash advance of $300,000.

(10) Credit Card Factoring and Credit Card Processing Difficulty: 12 to 24 months of credit card sales required. Suggested merchant cash advance and credit card receivables requirement: Most recent six months at $5,000 or more in sales.

Can Credit Card Financing Difficulties Described Above Always Be Eliminated?

Absolutely. There are credit card financing programs which preclude all of the difficulties listed above. It is not prudent to accept any of these ten obstacles to receive a merchant cash advance based on credit card sales and credit card processing activity.

Of course, not all of these potential problems will be relevant to each commercial borrower. Most commercial borrowers will encounter at least 2-3 of these problems if they are reviewing business cash advance programs that use credit card receivables and credit card processing as the basis for obtaining short term business loans.

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