Ron was dejected. He had gone to the bank today. The loan application that he had submitted last week, was rejected. The bank had wanted collateral for the loan which he was unable to provide. He was in dire need of funds, as he had to pay his suppler for the stock received for the last three months, or the supply would cease. His departmental store, which has been in business for the last three years, was in big trouble.
Do you see yourself in a similar position like the one you just read about? In such a situation, the first thing that comes to our mind, is to get a small business loan; however, you can always avail the use of a cash advance instead. The tediousness of applying for a small business loan, wherein one has to go through a whole load of formalities, and requirements such as security, a good credit standing and proof of a long business history does not apply in this case..
Small Business Cash Advance
Business cash advance is one of the easiest and the simplest ways, to fulfill the daily needs of a small business; and is usually provided in the form of cash paid upfront, in exchange for a share in the profit of the future credit card sales of the company. It is based on the concept of selling your future credit sales on discount, and receiving cash as a payment in advance from various lending companies. It is also regarded as the best form of unsecured loan.
While running a small business, a healthy cash flow, is always required to meet your daily financial needs. Cash given in advance for small businesses has become very popular, as it is easily available in the money market and the approval rate is very high. This facility does not require any collateral as it is based on the credit card sales (i.e sales specifically made through the use of a credit card) of the business. It is very flexible compared to a small bank loan. There is usually a restriction on the funds obtained from a bank loan, as the loan granted is for a specific purpose. A cash advance cannot be used as a business startup venture capital. It is usually used for buying stock for daily use, purchasing equipment, changes in the store, and payment of small debts. Any business which has no credit card sales cannot avail the facility of a cash advance for a small business.
The basic requirements for a business to be eligible for a cash advance are:
- It should be a restaurant, a retail outlet or a service business.
- It should have been in business for a required period.
- It should accept credit cards as a mode of payment.
- It should provide the facility of personal or business credit.
- It has to provide bank statements for the last three months.
- Its credit sales should reach a certain required amount for every month.
Cash given in advance for small businesses has proved to be a very business-friendly concept. It is proving to be a much better alternative than the traditional business loan. These are some of the common advantages:
- No monthly payment is required, as payments are deducted, directly from the daily credit-card sales receipts.
- The liability of repayment is on the part of the credit card company and not on the business, as the repayment is deducted directly, from the daily credit card sales receipts.
- There is no interest to be paid on the funds acquired through cash handed in advance.
- It is not time bound for repayment, as it is based on the daily sales volume.
- The approval time is quick, as it is based on the current performance, and not on the past performance of the business.
- There is no fee required to be paid for availing the facility of a cash given in advance.
- There is no security or collateral required, as it is based on your future credit card sales.
- There are no restrictions laid down by the lending companies, in terms of the specific purpose that the loan has been used up.
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