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Ten Problems To Avoid With Business Cash Advances

Even thriving small businesses frequently need more cash than they can borrow from a bank. One of the least-known commercial financing strategies for small businesses is potentially the single best strategy for obtaining needed cash for growing their business. This commercial financing strategy uses an under-utilized business asset (Credit Card receivables) to obtain business cash advances based upon a merchant's sales volume. These business cash advances typically vary from $5,000 to $250,000. Small businesses will frequently benefit from converting future cash flow into immediate working capital. The most likely candidates to benefit from this strategy are restaurants, bars, service businesses and retail stores.

This strategy is also known as "credit card factoring". Many small businesses have relied upon a commercial financing strategy called "receivables factoring" which allows them to sell their future receivables at a discount. Most small businesses cannot adequately document their receivables in order to qualify for this kind of commercial financing. Many other small businesses (such as restaurants, bars, service businesses and retail stores noted above) simply do not have such receivables to rely upon as a commercial financing tool.

What these businesses do have in many cases is documented sales volume and documented credit card sales activity. It is this documented level of sales volume and credit card sales activity that becomes a financial asset to the business. Business cash advances up to $250,000 can be obtained based on a merchant's sales volume and future credit card sales.

Before employing this strategy, small businesses should realize that there are several recurring potential problems that they need to anticipate. Several of these problems are highlighted below.

• Up-front fees

• Closing costs

• Financial Statements required

• Collateral required

• Fixed term to pay off the business cash advance

• Fixed payments to pay off the business cash advance

• High credit scores (680 to 700 or higher) required to qualify

• 2-3 years or more in business required to qualify

• 12 to 24 months of documented credit card sales of $10,000 to $25,000 or more required

• Maximum business cash advance of $10,000 to $50,000

Not all of these potential problems will be relevant to each commercial borrower. Most commercial borrowers will encounter at least 2-3 of these problems if they are reviewing business cash advance programs that use credit card receivables as the basis for obtaining short term business loans. It is not necessary to accept ANY of these problems in order to obtain business cash advances based on future credit card sales. There are viable credit card receivables programs which avoid all of the problems described.

As noted above, there are several major obstacles involved when obtaining a business cash advance. A recommended follow-up to this article discusses when a commercial hard money loan might be appropriate for a business to consider ( http://aexcommercialfinancing.com ).

About the Author

Steve Bush is the Chief Executive Officer of AEX Commercial Financing Group, LLC and the publisher of The Commercial Real Estate Loans and Commercial Mortgages Guide and The Credit Card Receivables Guide. Contact: (888) 593-3951.

When selling a used car on Craigslist, is it a good idea to do business CASH ONLY?

Even If I'm selling it for $4000? That's a lot of cash? Anyone sold a used car on craigslist before? Care to share your experiences so I don't get robbed/ripped off/scammed?

Thanks.
I've also been asked to provide the VIN (Vehicle Identification number) from some of the interested buyers. Is this a reasonable question on their end? Is this safe to share with individual interested buyers?

It wouldn't be a bad idea. But any other transaction you can verify...a direct bank transfer in person at the bank, a cashier's check that you witness the buyer purchasing at a bank...is just as safe.

Yes, requesting the VIN is perfectly reasonable. They want it so that they can check the car on Carfax. Not providing a VIN instantly rules your car out when I'm car shopping.

You should put the VIN in the ad, even.

It cannot be used for scamming YOU. Someone might use it to scam someone ELSE, or an insurance company...but they could use ANY VIN for that.

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