Small Business Cash Advance – How Does it Work?

For weaker credit individuals and/or Working Capital needs, a Small Business Cash Advance can still be accomplished somewhat easily.

How? A very common type of Small Business Cash Advance is where a finance company will advance you funds based on your future credit card sales.

We all know that Financing A New Business can be difficult but if you have at least 6 months in business under your belt, and are in need of some working capital financing, this may be the way to go.

How does it work? Simply put, you are going to gather the last 4 months of your credit card sales statements to show the finance company what your average monthly sales are. If you meet the criteria, they will buy a portion of your future credit card sales at a discount and you will pay them back as you “batch” out each day.

You will probably have anywhere from 9 to 14 months to pay back the advance. The great thing about this type of Small Business Financing is there is no monthly payment to keep track of. The advance that you receive is paid back daily based on the percentage of credit card transactions that you did for the day.

So if you have a slow day, your payment that day will be smaller. If you have a more profitable day with credit card transactions, your payment will be higher.

Some criteria that will be considered when approving you for a cash advance for your business is how many transactions per day you are doing, how big each transaction is, etc.

It will be harder to get approved if you have only a few small transactions per day because most finance companies who offer this type of cash advance will not take more than a small percentage of your daily sales. For obvious reasons, they do not want to put you out of business.

A Small Business Cash Advance can be a great alternative to Small Business Financing if you are in need of Financing A New Business or just in need of some Working Capital Financing. The finance companies generally do not care what you are using the funds for so this type of financing is especially good if you are strapped for cash or need money to expand.