Business Cash Advance Strategies Ten Problems To Avoid With Credit Card Receivables

Writen by Stephen Bush

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 best strategy to quickly obtain 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 $300,000. 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 $300,000 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. Ten common problems that small business owners should avoid when employing this strategy are highlighted below. Preferred/Recommended business cash advance requirements are shown in parentheses after each potential problem.

1. Up-front fees (Preferred/Recommended: No up-front fees)
2. Closing costs (Preferred/Recommended: No closing costs)
3. Financial Statements required (Preferred/Recommended: Financial statements not required)
4. Collateral required (Preferred/Recommended: Collateral not required)
5. Fixed term to pay off the business cash advance (Preferred/Recommended: No fixed term for repayment)
6. Fixed payments to pay off the business cash advance (Preferred/Recommended: No fixed payments)
7. High credit scores (680 to 700 or higher) required to qualify (Preferred/Recommended: Credit scores of 500 or better)
8. 2-3 years or more in business required to qualify (Preferred/Recommended: 1 year in business)
9. 12 to 24 months of documented credit card sales of $10,000 to $25,000 or more required (Preferred/Recommended: 6 months of $4,000 or more)
10. Maximum business cash advance of $10,000 to $50,000 (Preferred/Recommended: Maximum cash advance of $250,000 to $300,000)

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 above.

Copyright 2005-2006 AEX Commercial Financing Group, LLC. All Rights Reserved.

Stephen Bush is the Founder and Chief Executive Officer of AEX Commercial Financing Group, LLC ( steve.bush.googlepages.com/aex ). Information about enrolling for a free online six-part series of Special Commercial Financing Reports or a free online seven-part Commercial Mortgage Course is available at all AEX Commercial Financing Group, LLC websites (including aexcommercialfinancing.com ). AEX Commercial Financing Group, LLC is based in Ohio and provides commercial real estate loans for purchases, construction and refinancing from $100,000 to $5,000,000 throughout the United States. AEX Commercial Financing Group, LLC also provides assistance in obtaining immediate working capital up to $300,000 using credit card receivables for retail stores, service businesses, bars and restaurants ( aexcfg.com ). Steve can be reached by phone at (937) 502-1345 or toll-free (888) 593-3951.