Credit Card Factoring gives retail and service business owners with significant credit card sales, quick and easy access to working capital financing. It is a fairly new business financing technique. It is known by several other names, such as business cash advance, merchant funding, merchant account cash advance, or merchant cash advance.
A Merchant Cash Advance or Credit Card Factoring is a type of funding which isn’t a loan. MCA refers to the lump-sum payment received by a business in exchange of future credit/debit card sales receivables. It is one of the most popular methods used by small business owners who deal with credit cards (restaurants and other retail merchants). Cash advance providers supply funds based upon a business’ monthly volume of credit/debit card transactions.
When compared to the interest rate on a bank loan or business line of credit, Credit Card Factoring is quite expensive. However, Merchant Cash Advance (MCA) or Credit Card Factoring is becoming more and more popular over the years. This can be accounted for the following reasons:
- They are easy to qualify for: Banks are becoming stringent and have rigid eligibility criteria. Whereas merchant account cash advances are easy to qualify for.
- Availability of quick money: As compared to weeks and months taken up by the bank to make loan available, merchant cash advance, approval time is only between 24 to 48 hours.
- Even people with Bad Credit can qualify: Anyone with Bad credit report will find it impossible to qualify for a loan from the bank. However, Merchant cash advances provide an alternative option to those with low credit scores.
- Flexible Payment Plans: Compared to a bank loan or business line of credit, which has a firm date that it has to be repaid with fixed payments that have to be made on a schedule, a business cash advance offers tremendous flexibility. You have no due date, no fixed payment.
- No Collateral required: Since MCA do not require collateral, many business owners are attracted toward this option. It also enables the option to be available to people of all income level.
- Relatively economical option as compared to credit cards: Though credit card factoring is quite expensive when compared to bank loans and business line of credit, it is still a cheaper option than using a credit card for daily purchases. Secured credit cards often entail high-interest rates.
We at BusinessCash.com offer a low rate Business Cash Advance program. This business funding solution is ideal for those who can’t get approved for a traditional loan at the bank. It’s a great alternative when credit and collateral aren’t healthy, and business history is limited. It is apt for you if a large part of your revenue comes from credit card payments. Credit card factoring offers a flexible way to manage cash flow, build business credit, and grow your company – all the while opening the doors to traditional business financing. So consider Credit Card Factoring as a short-term finance option. You can use this to improve your credit score and then opt for traditional bank loans.