If your company is about to or has been turned down for loans to small businesses, unsecured line of credit, financing of unsecured business or other activities of short-term financing as a "circulating capital" have heard of credit card receivables financing (CCRF)-but you're not quite sure what is. CCRF is alternative financing solution that many existing companies would be able to use when they do not qualify for traditional bank financing.
Revenue from the proceeds of the financing of a credit card is quick, easy and convenient way to obtain capital or short-term loans business for the company, which adopted the credit cards as payment for their goods or services for at least the last six months. Unfortunately is not available for start-up loans, financing of start-up, the new loan will be explained later in this article.
However, many business owners still do not fully understand the difference between Merchant advance (or business advance) and receivable financing credit card. The reason is they are very similar in requirements in order to qualify, quantify and repayment method-but they are different.
While both are known as is a difference in the form of credit card receivables financing, the primary (and best); Merchant cash advance (MCA) is the actual "purchase" of future credit card with a discounted rate. Is unsecured financing, but is not classified as a loan. Many such as "Accounts receivable financing" of the same concept applies, i.e.; The company sells its receivables at a discount to cash that you now and agree to repayment of funds from future revenues. Because this is the purchase of future credit card sales company providing financing is not obliged to transfer the fixed rate of interest. In fact, even cannot invoke what is charged at the rate of interest, it's called "the cost of money" and the amount charged may vary based on factors designed with your business. (These factors will be discussed in another article, especially relating to Merchant Cash advances).
The CCRF activities still uses the future credit sales as a basis on which the lender will determine the amount of funding, but the difference is that the CCRF is TRUE regulated "business loan" and, as such qualification is slightly more involved, but the costs are typically 50-80% less than most of the MCA.
When attempting to secure any type of business loan, line of credit unsecured business financing business or many new owners of small businesses will try to qualify for CCRF due to benefit savings offers. In fact, many owners, who have now MCA will use to repay the advance existing CCRF because as far as they are able to save on the cost of money.
Another advantage of the CCRF, in the early years, many companies are not able to establish a credit history, that the banks will require, in order to qualify for the loan. The CCRF as payment to the owner operator, you can make sure that those payments to unsecured loan, are reported to the credit agencies, so that the history of repayment is made. This could potentially increase your Credit Score and is likely to help in the future, the Bank's loan applications. In addition, may be tax advantages that Your accountant may be familiar with regarding the payment of interest, and so on.
Both of the CCRF and MCA the size of the funds, which you receive depends on your monthly credit card sales. And funding typically varies between 100 to 150% of Your monthly credit card sales. For example, if your business Visa/MasterCard sales monthly average is 10 000 $ lenders can finance the $ 10,000 to as high as $ 15,000 for the conditions of the normal six to twelve months, which are offered. Remember, this is an unsecured loan is short-term capital so there are 36 or 60 months of the date of payment.
In order to qualify, companies had to process at least $ 3,000 in Visa/MasterCard transactions each month for the previous six months, be in business for at least one year, have a minimum score FICO 540 or greater, have at least one year in business lease or own property and not open bankruptcy, foreclosures or mortgages (some mortgages from payment plans may be OK). There is no security required and the term is usually six to twelve months.
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