Are Business Cash Advance Loans the Fulfilment of Your Dreams?
Many aspiring entrepreneurs apply for bank loans to execute their business plans. For an established business, what types of financing methods are in store for you? Where can you turn to if you need cash in a hurry and waiting for a loan to be processed is not an option?
Easy Cash Loans for Small Businesses
For instance, an old customer placed an exceptionally large order but you don’t have enough stocks or materials to produce a large bulk. Because you lack the funds to purchase more stocks or buy the needed materials, will you refuse your customer?
Apart from losing the sale, such a move can cause a huge disappointment to your client and can negatively affect your future transactions. Fortunately, there are lenders in the market that offer business cash loans with easy approval.
What are cash advance loans?
Cash advance loans are viable options for short term financing demands. Unlike traditional loans for small business, a cash advance loan is secured by submitting invoices from your credit card transactions. Instead of waiting for 30 days for these transactions to be completely processed, you can instantly get the cash you need in exchange for a small fee.
Most lenders offer up to 80% of the amount of invoices submitted. Once your customer pays the credit card bill, you will receive the rest of your balance from your cash advance loan lender. On the other hand, if your customer fails to pay on time, your lender will keep the remaining 20% of your invoices as penalty charge.
Accounts Receivables Factoring
What if you do not accept credit card payment? There is another short term financing option similar to cash advance loans. This type of loan is called accounts receivables factoring. In this case, you can use your regular invoices (non-credit card transactions) as security for your loan.
Once approved, your lender will notify your customer that the collection of debts has been turned over to the factoring company. Many suppliers are familiar with this type of arrangement but if your customer doesn’t know what it is, the factoring company will send a detailed explanation on how account receivables factoring is done.
As with cash advance loans, business owners are warned to use these financing options only for short term needs. If you are planning to invest on a project or if you want to expand your company, acquiring a traditional business loan is still the best choice.
Irish Taylor is a bussiness loan consultant with Startup Business Loans and has been providing consumers and business owners with startup business financing since 1992. For years she has helped people with credit and loan problems especially pertaining to business start up, SBA loans and Unsecured loans.
Copyright 2008.
Related Article: Borrowing Money To Build Your Business
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