Let’s say you have a restaurant. Your restaurant needs $20,000 for remodeling, and the business qualifies for a $20,000 Merchant Cash Advance to cover all the associated costs.
To get this money, your restaurant would sell the Funder the right to receive a specific amount of your future credit card sales. For this illustration, let’s say $20,000. So the business sells $24,500 worth of its future credit card sales to receive the $20,000 needed right now. The entire amount is paid back by having a small amount of each credit card transaction designated to pay back the advance.
The $4,500 difference between what the Funder pays your business and the amount of future credit card sales it purchases could be less than the cost of getting a traditional loan if you consider all the possible costs associated with a loan, including appraisals, surveys, underwriting, title insurance, brokerage and attorney fees.
The main benefit to a cash advance is that you generally do not have to sign personally, it takes a fraction of the time and paperwork and many small businesses will be approved for financing that would not be considered for a ‘bank loan’.
Art Fried is a Certified Cash Flow Consultant and President of Get Funded Today, Inc. His specialty is to assist businesses with increasing their daily supply of available cash without accumulating debt. He can be reached by phone at 1.800.480.4007; or e-mail, PlugIntoCash123@gmail.com. Visit www.PlugIntoCash.com.