Getting A Business Financing Loan

Business financing loans are a line of credit which help people who are in business. There are different kinds of business financing loans that are offered to different lenders either to raise funds or loan capital to your business in order to expand your company.

Although there are many ways also to finance your business and one should have sufficient cash flow within the existing business you have so that the lender will be able to finance the growth of your company by its own means or you can turn to a bank or other financial institutions that can provide different variety of loans.

Having a business financing loan is not as easy since they have some criteria or financing programs where in you meet the following criteria such as:

  • Your business must have commercial customers
  • Your business must be established and must have consumers or customers.
  • They don’t finance on real estate projects

Some of the business financing programs:

  • Business are available of every size
  • Easy to obtain
  • Have many advantages over conventional business loans
  • Can be set up in a few days

There are some business financial loans that don’t require you to have a good personal credit or showing countless financial statements since their financing program or loan allows being flexible to help your business grow but before looking for a business financing loan, you need to know how business loans work and used.

You can see that there are many sources of financing loans that are geared to types of businesses but the sources have certain criteria for investment and loan but that depend to the area which they participate.

These are some of the areas of Business Financing Loan:

  • Commercial Property
  • Start-up Financing for business
  • Loans for Government
  • Purchase Order Advances
  • Leasing Equipment
  • Commercial Financing
  • Invoice Factoring
  • Asset Sales Leaseback
  • Investment Banking
  • Angel Investor s which is known as informal investor
  • Venture Capital known as Private Equity Capital

But private money business financing loan is different since it includes equity loan, hard money as well as private money loans. They limit only to small business investment companies, private investors, business angels, ventures capital firms and commercial lenders.

The loans have two types for you to choose when in regards of terms in payment. There is the short term and as well as long term which suits your budget and you will notice also that there are lots of commercial lenders, business loan brokers and business financing companies had gone out of business due to global crisis and many people were having loans anywhere and everywhere in order to survive.

If you need financing for your business, you need to plan and study hard of it since financial institutions requires business plan that includes detailed start up cost, marketing plans, monthly expenses, projected profit, etc. Remember that having a business one should do hard work, passion, and determination and have dedicated workers who desired to have the business of their boss grow with success.

So If you think that your business is doing good and need some additional capital for expansion, then you need to plan for that and think it over to have a successful business.

Merchant Cash Advances – A Small Business Lifeline for 2008

When a business needs funds quickly, a merchant cash advance offers unlimited flexibility. Also, it’s easy and exceptionally fast. Cash in your hands in 5-7 working days.

80% of all small businesses fail during the first year. 92% are unable to get traditional financing from banks. Restaurant and retail operations, or any business that accepts credit cards as a form of payment, can now get a credit card factoring cash advance on future credit card sales. And many smart companies are using that option to grow or just stay afloat.

There are as many different needs for a merchant cash advance, or credit card receivables financing, as there are small businesses operating today.

For example, a restaurant owner who can’t quite make payroll may survive the crisis and keep his doors open with a merchant cash advance.

A mom and pop hardware store could suffer a flooded basement or damaged piece of equipment or loss of inventory and need to make an immediate and often substantial expenditure. Even when these extra expenditures are covered by insurance, there might be a lag time until reimbursement. This is where a credit card receivables advance can become a small businesses lifeline.

Then, there’s just the unpredictability of running a business on a day to day basis. Routine occurrences, like a slip in sales because of bad weather or a shutdown during a power outage or road maintenance, can cause a significant cash crunch.

Small businesses may also need a quick influx of cash for a growth opportunity. If a hair salon is looking to expand its services and become a day spa and the space next door suddenly becomes available, the owner will need money to renovate. With a cash advance the owner could have the needed funds in hand in just 5-7 working days.

The advance amount the merchant can receive is determined by calculating the company’s average monthly Visa and MasterCard credit card sales for the past six months. The level of financing ranges from $5,000 to $1,000,000 per location.

The loan amount is typically 100 percent to 150 percent of the average monthly Visa/MasterCard volume. Cash is also used as the basis for the loan in certain situations, such as diners, pizza places, and sandwich shops. The bottom line: The merchant’s monthly payment should be in the neighborhood of 10 percent of his total monthly volume, including cash, and Visa/MasterCard.

Loans generally average $35,000-$50,000, and the loan is paid back within 5-12 months. After the merchant pays back 50% of the advance, he has an opportunity to renew the arrangement again.
Payment is very simple.

The funder will work through a credit card processor to draw money from actual profits as payments are made using credit cards. Or, the merchant cash advance funder may draw his payments directly from the merchant’s bank account once the credit-card payments are deposited there (ACH Withdraw).

A merchant cash advance can be a great way for a small business to get the cash it needs to grow, or to get through a particularly difficult time. Will you need a cash advance in 2008?

Look into this option now before you need the funds. Merchant cash advances are a great “emergency cash” plan as well. Be prepared! It’s your business. And for many small businesses, it may be the only source of funding that will help it survive.

For a free- booklet, please log onto “10 Ways to Get Working Capital”.

Dan Ollman is President of Crown Financial Services. Crown Financial Services is a proud member of the American Cash Flow Association, Las Vegas Chamber of Commerce and the Las Vegas Better Business Bureau. They provide working capital to businesses by purchasing a small portion of their future credit card sales.

Crown Financial Services helps you turn your future credit card sales into cash. We provide small business cash advances for merchants who currently have credit card processing. You can get a cash advance on future credit card sales with a merchant account cash advance loan. Merchant account financing, also called credit card receivable factoring, is an excellent alternative to restaurant loans and other business loans.

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An Explanation of the Cost of a Merchant Cash Advance

What does a Merchant Cash Advance Cost?

Merchant Cash Advance Cost Perception

There are a good number of posts available with reference to the merchant cash advance business on the internet and major publications like Inc Magazine and Business Week. The viewpoint among these contributors with respect to the charges of a merchant cash advance is that it is high-priced.

It should be understood that there is no masking the charges of this program. Each small business that chooses to do a cash advance should work only with a company that presents All of the of the conditions in writing before any agreement is settled or money is exchanged. Before you sign, request the money you are requesting, the total you are repaying, and the retrieval percentage (or holdback percentage) all in writing.

Explaining Merchant Cash Advance Cost

In terms of this program, cost is defined by the cents paid per dollar borrowed. For instance, a $10,000 advance that repays $13,000 would equal 30 cents on the dollar.

Another way cost is discussed is by price ratio or as a factor. Using the aforementioned illustration, the price ratio or factor of that advance would be 1.30. This translates as when you take $10,000, you multiply that $10,000 by 1.30 which equates to $13,000.

One last way to look at this is the merchant cash advance in its actual form. The lending company is gaining $13,000 worth of future credit card receivables for $10,000. You being the customer take delivery of $10,000 and repay that money plus $3,000. An APR for this product isn’t appropriate because there is no set repayment period and there is no monthly payment. The lending company collects a small percent of your future credit card receivables up till it reaches $13,000.

Explaining the Actual Cost of Borrowing Money

A 30-year home loan for $250,000 at a 5% APR will have a total repayment of $483,136.69. This is $233,136.69 of interest or 93 cents per dollar borrowed which doesn’t incorporate property tax, closing fees, etc. Of course, this is a very, very long term and over 30 years the interest has to build up, right? What is interesting though is that 93 cents on the dollar is deemed to be a really good deal because the APR is only 5%.

Let’s look at a $100,000 business bank loan for 5 years at an APR of 8.5%. The total repayment will be $123,099.70. This is $23,099.70 of interest or 23 cents per dollar borrowed. Let’s also add to the equation that the bank is going to hold a blanket lien against your business and it’s assets plus any additional collateral (including personal property) to protect the loan. While 8.5% or 23 cents per dollar borrowed appears to be an attractive borrowing preference, who is more at risk, you or the bank? And if your company is not able to repay, who will be saved – the bank or you and your family?

How Does Cost Relate to Merchant Cash Advance

Now, let’s look at a restaurant that irrespective of their credit score or business performance hasn’t had the chance to borrow money from a bank since 2006. And, let’s say this restaurant has done seven advances over the last five years with a total amount borrowed being $100,000. And, we’ll say their first deal was priced at 32 cents on the dollar. As they continued to perform, the restaurant was able to work the rate down to 22 cents on their subsequent deals. This would average out to 27 cents on the dollar. This means this particular merchant over the course of five years borrowed a total of $100,000 and repaid a total of $127,000. Pretty close to the bank loan, right? Except without the risk to the borrower.

Individually, the five advances may have been more or less expensive than 27 cents on the dollar, but when you look at all of the advances, you begin to see just how reasonable this program can be. The majority of customers who do a cash advance will do more than one which is discussed in the next section.

Some Final Insights on Cost

The cash advance program is in the category of alternative business financing for a reason. It’s an alternative option for businesses who are not eligible for business bank loans. However, the rationale that a merchant cash advance is usurious and that these providers are avoiding the issue of fees is incorrect.

Merchant cash advance establishments fully understand that these programs satisfy a void in today’s economy and they also understand risk. And, we all have got to understand that risk has a worth. Cash advance suppliers are bringing small businesses the income opportunity to evolve, and they produce feasible access to working capital.

It is projected that between 55% to 70% of users who use this form of financing will do so more than once. How many other businesses have up to a 70% success rate? And, referring to to our case above, when a merchant cash advance is utilized more than once as it typically is, the price of the money becomes that much more acceptable.

Like any choice in business, you really should weigh the opportunity cost of the plan. The final decision focuses on whether you will be saving time, saving money, or generating revenue. Will a merchant cash advance grow and greatly enhance your business? Will having access to working capital save you time or reduce stress? Will a bit more money let you to invest in income generating initiatives?

Better Business Funding is small business funding source specializing in merchant cash advance, working capital loans, and equipment financing. Our success depends on our ability to connect with small businesses and help them understand their options when it comes to borrowing money. Our goal as always is to secure the right financing at the right time so these businesses can grow and succeed.

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