Business Cash Advance

Why don't business cash advances improve your business credit?

Why don't business cash advances improve your business credit?

Very simply, they don’t report to the credit agencies. A Merchant Cash Advance (MCA) can provide business borrowers with an upfront fixed amount of cash in as little as 24 hours. The funding amount is based upon a percentage of the businesses credit card receivables or daily cash balances using historical credit card receipts and bank statements to determine the initial advance. The business pays back the advance, plus a percentage, often referred to as a discount factor, from a portion of their credit card receivables or cash available plus a percentage which is often referred to as a discount factor. The remittances are drawn from the business customer on a daily, weekly or monthly basis until the obligation has been met. An MCA is not technically a small business loan and as such MCA's are not limited in what rates they charge or what terms they establish and therefore often have high interest rates. For this reason it is very important for a business owner to be completely aware of how the MCA product works and how it could affect their business. MCA's are good options for small business owners who may not have strong credit but have lots of credit card activity and need financing quickly.

If you’re interested in learning more, the following link will get you to a great article that breaks it all down:

Although Often Misunderstood, a Small Business Cash Advance or Credit Card Merchant Cash Advance Could Work Wonders For Your Business...If Used Correctly!

Think a Merchant Cash Advance is Bad for Business? Think Again...

Among business analysts, lenders and small business owners alike, there’s continued controversy over the value and potential risks of a little understood lending alternative called the merchant cash advance. Merchant cash advances may also be referred to as: Same Day Small Business Financing, Merchant Cash Advance Loans, Business Cash Advance, Unsecured Business Loans, Merchant Money Advancement, Merchant Cash Financing, No Interest Merchant Loans, Unsecured Business Loans, Business Cash Advances, Merchant Cash Advance Loans and Merchant Loans. While this quick capital option continues to be shrouded in negative speculation, an increasing number of business owners seem to be availing themselves of a merchant cash advance, and with good results. So just what is a merchant cash advance, and how did it get such a bad reputation? Let’s break down the facts:

In a nutshell, A Merchant Cash Advance (MCA) can provide business borrowers with an upfront fixed amount of cash in as little as 24 hours. The funding amount is based upon a percentage of the businesses credit card receivables or daily cash balances using historical credit card receipts and bank statements to determine the initial advance. The business pays back the advance, plus a percentage, often referred to as a discount factor, from a portion of their credit card receivables or cash available plus a percentage which is often referred to as a discount factor. The remittances are drawn from the business customer on a daily, weekly or monthly basis until the obligation has been met. An MCA is not technically a small business loan and as such MCA's are not limited in what rates they charge or what terms they establish and therefore often have high interest rates. For this reason it is very important for a business owner to be completely aware of how the MCA product works and how it could affect their business. MCA's are good options for small business owners who may not have strong credit but have lots of credit card activity and need financing quickly.

The MCA business has grown tremendously since 2007, when the recession led banks to cease lending to small businesses almost completely. As with many business phenomenons, the potential of this unregulated profit source encouraged a few irresponsible providers to advance as much capital as possible, regardless of borrowers’ demonstrated ability to repay. These deceitful lenders held business owners to exorbitant interest rates and used contracts riddled with vague clauses and hidden fees.

At the height of the financial crisis, the unregulated nature of the MCA business left many saying “Thanks, but no thanks.” But since then, industry competition has led to tremendous downward pressure on interest rates and improvements to quality regulation.

Simply put, for small businesses who need cash immediately and don’t qualify for a traditional loan, an MCA could be a lifesaver. Despite the controversy, here are a few reasons this lending alternative deserves a second chance:

Fast access to cash

Cash advance applications typically require less paperwork and have faster turnarounds than traditional loans. In fact, LVRG is able to transfer lump sum capital in as little as a day in some cases, which can be lifesaving for a business with an unexpected cash flow emergency.

A good option for bad credit

Merchant cash advances biggest advantage as a loan product is that it opens up a channel for business owners with bad credit to get liquid cash. Additionally, the customer’s credit score isn’t as important as their future sales projections, given that the provider is paid back through a percentage of daily credit card sales.”

Flexible return payment

With a traditional loan, the same minimum payment on principal and interest is due month to month, regardless of whether business is in a slump. This can be a big challenge for seasonal businesses that don’t have a regular cash flow. But because a merchant cash advance is repaid through a fixed percentage of daily sales, borrowers have the flexibility to repay more when sales volume is high and less during slower sales periods.

No collateral required

If an entrepreneur doesn’t have significant personal assets to leverage, traditional bank loans can be almost impossible to obtain. And even for business owners who do have significant home equity or other assets to be used for collateral, the risk that entails doesn’t always sit well. One benefit of the MCA model for borrowers is that no collateral is required, meaning if the business fails, the provider has little recourse to collect.

Our expert funding advisors are ready to learn about your business needs to determine if a Merchant Cash Advance is right for you and your business. Call us toll free at (855) 998-5874 or click below. 

 

How Merchant Cash Advances Differ From Small Business Loans

Merchant cash advances are classified as commercial transactions, not loans. Here are the distinguishing characteristics of merchant cash advances:

No Fixed Terms. Providers estimate the term for repayment based on the business’ sales history. The customer is charged a set fee, referred to as a factor rate and there are no interest charges.

Cash Advances Are Unsecured. The provider does not receive any collateral or guarantees, accepting all risk of the client going out of business.

Minimal Documentation. Often, a client can simply provide six months of processing statements, two months of bank statements, a copy of a mortgage statement or property lease, and a driver’s license.

No Fees. There are no late fees or penalties attached to the product.

Fast Approval and Funding. Most cash advance providers can approve and fund an application in 2-7 days, LVRG can get you funded in less than 1.

Daily Repayment. This varies according to the volume of the merchant, and changes according to the business cycle. The provider receives a set percentage or amount of the merchant’s daily card settlement batch.

Want to see if a Merchant Cash Advance is right for your business?

 

The Role of Working Capital for Restaurants

Running a successful restaurant should be an exceptionally satisfying experience, yet it can pose certain challenges. In a late study of restaurant owners, just 38% depicted their current financial picture “good to excellent." Being ready to handle a wide range of difficulties is the wellspring of incredible fulfillment, alongside a few cerebral pains as well.

In any case, when restaurant owners are requested to state their most prominent test, one issue tends to seems to make its way to the top… Cash Flow! Many restaurant owners have trouble gaining access to business cash and working capital to oversee income. As such, ensuring there is sufficient cash flow streaming in will cover the funding that is flowing out.

There are many reasons why income can be a precarious test for restaurant owners. First off, it's extremely costly to own and operate a restaurant, things like workman’s comp and food cost expenses are over the top. Other matters such as acquiring an intemperate stock of perishable food, poor anticipation of the volume of business, and even the powerlessness to alter costs as frequently as the primary expenses vacillate. Possibly you have poor payment terms with the suppliers, or maybe the restaurant is located in a vacation spot, so your business is more occasional.

Frequently, restaurant owners can advance income by arranging longer installment cycles, yet that is not generally a choice. Fortunately, there are different restaurant finance solutions that can provide necessary cash flow for such things as:

  • Expanding or remodeling your restaurant to bring in more customers
  • Purchasing new kitchen equipment or a POS system to improve efficiency
  • Advertising to attract more customers and/or promote special events
  • Boosting your cash flow to help with unexpected business expenses

There are a few terms that may be associated with restaurant funding or working capital loans, these terms include: working capital for restaurants, merchant cash advance, cash flow for restaurants, merchant loans, cash advance business loans, loans against credit card sales and revenue based loans.

Unlike conventional bank loans, we won’t make you jump through hoops or wait for months for financing. Our small business loans and merchant cash advances give you the flexibility to address the unique needs of your restaurant. Our cash flow loans, cash advance business loans, merchant loans, restaurant loans and other funding options give you the freedom to grow your restaurant, your way.

You can put a merchant loan, business cash advance or restaurant cash flow loan to work immediately,  whether it implies meeting certain financial obligations for a couple of months, ordering additional inventory, hiring new staff or running a marketing campaign. Then, there are still expenses that no restaurant owner can anticipate; the sudden need to replace broken restaurant equipment, a POS system failure or walk in cooler malfunction. Repairs, sprucing the outside or lounge area, notwithstanding advertising and marketing campaign can all be basic components to your image. In today's aggressive environment, there is no room for error. Working capital for your restaurant is only a couple of clicks away!

As one of the country's leading source of working capital for restaurants, we are aware that when restaurant owners need financing, they require it now and can't hold up for weeks. Along these lines, we've made the application procedure as straightforward as could be expected, with minimal documentation required.

Once approved, you'll receive an offer in just a matter of hours and the funds deposited in your business bank account usually within a day. So what are you waiting for? Restaurants in every city throughout the U.S. are relishing their prosperity on account of a restaurant working capital loans, cash flow loans, business cash advances and loans against credit card sales from LVRG. If you believe in your restaurant, we’ll help you take that next step to realizing your goals. Get started today and we’ll take care of the rest!

 

How to Utilize a Merchant Cash Advance to GROW Your Restaurant

Running a successful restaurant can be a very fulfilling, yet challenging task. In a recent survey of restaurant owners, only 30% described their financial situation as “good to excellent.” Being able to handle many different challenges is the source of great satisfaction, along with some headaches too.

In the last five years, it has become increasingly difficult for a business owner to access funds through a loan system by a financial institution. Statistically, approximately 80% of ALL small business that apply for loans from big banks get rejected. Sadly, that number is even higher for restaurant owners, as restaurants are typically on a banks restricted industry list. In order to deal with this shortfall, the Merchant Cash Advance (MCA) was developed in order to help small business owners obtain the capital needed to operate and grow their businesses. The key characteristics of a merchant cash advance include a limited amount of paperwork and quick access to funds, both of which see it as a much better source of funding than a loan. Loans from financial institutions routinely take weeks to months to complete processing, and the release of funds is sometimes just as slow. Assume you have an 800 credit score, a flawless credit history, and plenty of free time on your hands to upload endless amounts of paperwork, do you really want to wait 4 months to get the capital you need to grow your business...today? A merchant cash advance provider such as LVRG delivers funds to the receiver in a single lump sum payment and then is repaid over time like a loan. One of the major differences between a loan and a merchant cash advance (MCA), is that an MCA deals with the purchasing of a business' future income whereas a loan deals with lending money to a business in exchange for payment over time with attached interest.

There happen to be many terms used to describe a Merchant Cash Advance, here are a few to be aware of: Same Day Small Business Financing, Merchant Cash Advance Loans, Business Cash Advance, Unsecured Business Loans, Merchant Money Advancement, Merchant Cash Financing, No Interest Merchant Loans, Unsecured Business Loans, Business Cash Advances, Merchant Cash Advance Loans, Merchant Cash Advances

How does a Merchant Cash Advance Work?

An agreement is made between the business owner and the MCA provider regarding the advance amount, payback amount, hold-back and term of the advance. Once an agreement is made, the advance is transferred to the business’ bank account in exchange for a future percentage of credit card receipts.

Each day, an agreed upon percentage of the daily credit card receipts are withheld to pay back the MCA. This is called a “holdback” and will continue until the advance is paid in full. Access to the business owner's merchant account eliminates the collateral requirement required for a traditional small business loan.

Because repayment is based upon a percentage of the daily balance in the merchant account, the more credit card transactions a business does, the faster they’re able to repay the advance. And, should transactions be lower on any given day, the draw from the merchant account will also be less. This means that during times of slow business, the business’ payback is relative to their incoming cash flow.

If you are interested in exploring this option to grow your restaurant, but are questioning the ROI, here is a breakdown on how a $50,000 merchant cash advance can GROW your business.

Example: Advance Amount $50,000

Use of Funds:
• 10 Tables and 40 Chairs: $10,000
• Dry Bar (Includes Install): $10,000
• Heating & Lighting: $10,000
• Structural Renovations: $15,000
• Table Supplies & Décor: $5,000

Sales Increase Breakdown:
$240 in Daily Sales for every 1 Table Added
(Above Based Upon $40 Average Ticket Per Table x 6 Daily Operating Hours)

$240 in Daily Sales per Table x 10 Tables = 
$2,400 in Daily Sales

$2,400 in Daily Sales Minus 81% for Expenses (National Average) = 
$456 in Additional Daily Profit

$456 in Additional Daily Profit x 5 Days per Week x 52 Weeks = 
$118,560 in Additional Profit Annually By Adding 10 Tables

Restaurants like yours, all over the U.S. are savoring their success thanks to merchant cash advances from LVRG. The beauty of a merchant cash advance to grow your restaurant is, there is no collateral required, no minimum credit score and you can get your funds in a day. 

If you believe in your restaurant, we’ll help you take that next step to realizing your goals. Get started today and we’ll take care of the rest! Give us a call (855)998-5874, we're here to help!