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Business Lines of Credit
We provide funds at he lowest rates in the industry with flexible repayment schedules.
Many small to mid-sized businesses have trouble juggling merchant cash on hand with current and future financing requirements. These issues are even more difficult for a business owner with lower business credit history. A BCA empowers companies who accept credit card payments by allowing them to advance merchant cash quickly. How? A cash advance works by enabling a business to sell a portion of its projected future sales. This is not considered a small business loan or line of credit (LOC), but an alternative short-term business financing option. The basics of business cash advances are reasonably straightforward. In exchange for a lump sum of merchant cash, a business will offer a percentage of its daily sales income. This percentage of funds is directly sent to the lenders from the bank account by ACH or merchant processor and continues until the balance is paid. If you are a seasonal company that needs better merchant cash flow control, business cash advances are perfect for your business needs. These companies have continually fluctuating payments, and a cash advance is an ideal solution for short-term, seasonal, or sale initiatives. The terms, percentage options, score requirements, and overall facets of a business cash advance are extremely similar to an MCA. So, you’ll likely see us refer to these two interchangeably. The biggest difference is how you would repay the advance, with an MCA relying on a percentage of future daily credit card receivables while a BCA is broader, relying on overall sales. However, they are one and the same.
How Does a Business Cash Advance Work?
A business cash advance (BCA), also known as the Purchase of Future Sales Agreement, that cash advance a merchant future sales at a discount. The business owner is responsible for paying back a fixed payback known as a specified amount, which is higher than the amount that was advanced to the company. This difference between the advance amount and the payback amount is called the Factor Rate or cost, which is a fixed cost. These are not principal & interest costs. The advance is repaid by taking a fixed percentage of overall deposits called the specified percentage. The payments are collected by an ACH fixed payment deducted from a bank account based on the specified percentage of sales. At the end of every month, reconciliation can occur. If the fixed payments taken out of the account monthly are more than the set future percentage of monthly sales, the business can request a refund back to the merchant account for overpayment so that the set specified percentage of sales collected matches the revenue volumes. Repayment continues until the payback amount is paid back in full. There is no time limit with advances as the fixed payback percentage ever changes due to fluctuating revenue. This product is popular with small businesses that can not get traditional business financing, but need net working capital (NWC), cash flow, and fast funding. This business funding option is not a small business loan or term loan, but a short-term business financing alternative.
How a Merchant Cash Advance Works
A merchant cash advance, or business cash advance, allows a business to borrow against its future earnings. Unlike other business loans, collateral is not typically required to start a merchant cash advance, which means you can receive funds in as little as 24 hours.
Can a startup get a business cash advance?
A business cash advance is an option for startup businesses that may not yet qualify for other types of business financing. Because a business cash advance is repaid based on your business’s daily sales, time in business and other factors that usually make financing difficult for startups don’t apply. If your startup has strong daily sales, a business cash advance could be an excellent solution for your fast-capital needs.
If you have time to plan for your financing needs, startup loans and business credit cards can offer accessible financing for startups and may be able to round out your financing plans.
How is a business cash advance repaid?
Your cash advance is repaid based on your business’s daily sales. Depending on the way your cash advance is financed, your lender will either take a daily percentage of credit card sales or a percentage of the total daily business sales. Terms vary by lender, and we have 75+ lenders in our network. Your funding manager can walk you through all the terms and explain the nitty-gritty of your cash advance to ensure you’re getting the best possible financing deal.
Qualifying for a Business Cash Advance
Qualifying for a cash advance, like the funding itself, is often fast and easy. Due to the nature and terms of the loan, the requirements for a business cash advance are typically pretty lenient.
What you’ll need to do to qualify for a merchant cash advance:
- Provide 4–6 months of past bank statements or receivables
- Fill out this super-simple cash advance application
What you can typically skip when applying for a merchant cash advance:
- A mountain of paperwork
- A credit pull
- Your business’s precious collateral
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