If you run your own company there may be times where you face the unexpected and find your company in urgent need of a bad credit business loan. Talking to the local bank or Small Business Administration office could be your initial inclination, but do not waste your time. Neither is really providing money at this point, and those that do require such large amounts of paperwork and collateral that it is not a real option for most fresh establishments.
Don’t you find it odd that the very venues that are supposed to offer business capital do not, but do not despair–there is an alternative possibility. Your company can obtain a bad credit business loan through the little credit card terminal sitting on the counter at the register. Yep, the credit card account can help your business get capital when you want it. The flexible repayment schedule associated with the advance is correlated with your merchant account receipts and ensures that your payments will be sent straight to the funding company. Through your past processing statements companies providing these merchant loans already acknowledge that your company is a hit, and they are willing to help you grow further by extending a business cash advance.
The agreement, named a factoring agreement, entails you selling the factoring company a percentage of your anticipated credit sales in the future for capital right now. Being that they already know just how much you bring in on credit sales each month, they acknowledge how a small risk you pose. That means that your establishment may secure $5,000 to $1,000,000 at each location for vital expenses.
The repayment schedule that are created for your business cash advance is directly connected to your merchant account volume, so you should not have to stress that you will be obligated to a large payment. What’s more, it is a short term advance which you should have paid back within a six to twelve months at most, freeing up that capital for reinvestment when your establishment is prepared to apply it for something else.
There are a lot of companies which provide credit card factoring for small businesses. Even though the program is the same for the most part, there are some important differences among the companies. Primarily, the cost for the funds and time frame that you expect to pay back the funds. Even though there is not an interest rate or set term, there is a factor rate and a hold back % of your future credit card transactions. As an example, if you get a factor of 1.32%. This entails on a $10,000 advance you would have to pay back $13,200 or $.32 on the dollar when it’s all complete. As for the hold back, if it is 10% this means the factoring company will take 10% of your future credit card sales each day until the balance is paid back. So on the example above, assuming you process $10,000 each month, you will pay back about $1000 per month. This requires a term longer than normally issued. Realistically, your establishment will attain a hold back of 20% where you pay $2,000 monthly and complete the advance in 6 months.