When running a business, figuring out how to pay the bills can be a challenge. Even if you have plenty of sales, it can be difficult to get the cash flow in line so that your bills are paid when they are supposed to be paid. If cash flow is a problem for your business, merchant account loans can help fill in the financial gap. These loans can be very affordable and easy to qualify for, depending on your situation.

Merchant Account Loans

The basic idea behind this type of loan or cash advance is very simple. You work with a merchant lender who is willing to extend you a certain amount of cash to use as an advance. At that point, you set up a credit card terminal to accept payments from your customers. Every time you accept a credit card payment with your terminal, a small percentage of that transaction will go back to the merchant cash advance lender. By doing this, you pay back the advance a little bit at a time over an extended period.

Advantages

One of the biggest advantages of using this type of arrangement is that you do not have to worry about making a monthly payment on a loan. With a traditional loan, you have to make monthly payments regardless of what you have any money coming in or not. With merchant account loans, you do not have to make any payments. Your loan is paid back a little bit every time you accept a payment. By using a strategy, your only really paying anything when you have money to do it.

Another advantage of using this type of loan is that it is not dependent on your credit. If you’re unable to qualify for a traditional bank loan, you can usually still get a merchant cash advance. That’s because these advances are based on whether you receive enough money and credit card receipts over the course of a month. If you get enough credit card payments regularly, you should be able to qualify for this type of advance.

Considerations

While you should consider using this type of advance if you’re having trouble with cash flow, you should review the terms of the arrangement closely. These loans do cost money, so you should make sure that you get the best deal when you ultimately decide to sign up for a cash advance.

Do a little bit of shopping around to see what is available in this market. At that point, you’ll be able to get the money at the most affordable rate and then start using it to grow your business. In some cases, it can be a valuable tool to use even if you just want to keep the doors open and stay in operation.

When running a business, coming up with the necessary money to make things work can be a challenge. In many cases, business owners have to turn to various forms of financing and small business loans to come up with the money they need. One of the most common types of small business loans is inventory financing. When running a manufacturing firm or another type of business that has a large amount of inventory, a business owner could benefit from this type of financing.

What is Inventory Financing?

Inventory financing is a type of loan in which a business uses its inventory as collateral. For example, a business applies for a loan from a lender. The lender then puts a value on the inventory that the business has and then asks to include that inventory as collateral for the loan. The loan is then given to the business and the money can be used as the business owner sees fit. The business then has to make payments to retire the debt with the lender. If the payments are not made on time, the lender has the right to come in and seize the inventory. The inventory can then be liquidated in order to repay the debt on behalf of the borrower.

Determining Value

When getting involved in this type of loan, it is important to make sure that the valuation method for the inventory is understood. Business owners want to minimize the amount of inventory or other property that they have to put up as collateral. If a business owner can keep from putting up all of his inventory as collateral for the loan, this would be an advantage. In some cases, the lender will simply use the market value of the inventory. In other cases, the lender will use the value that the business has assigned to the inventory on its books internally. Figuring out how the inventory will be valued is important before the business owner ever agrees to this type of loan.

Terms

Before agreeing to an inventory loan, the business owner needs to ensure that he understands the terms of the agreement. In addition to finding out how the property will be valued, the business owner should also understand the terms of the loan. For example, the business owner needs to understand what interest rate is being used and whether the interest rate is adjustable or fixed. The length of the loan can vary significantly from one case to the next.

Considerations

This type of financing can be beneficial for businesses that have little else to offer in collateral. While the inventory may be used as collateral, the business will still have to meet some other requirements of the lender. In most cases, the lender will require the business to have a specific credit score and a certain amount of revenue to be qualified for the loan. The value of the loan may also be limited by the amount of money that the company brings in regularly.

Credit card processing accounts allow businesses to accept credit cards for payment against goods and services. Usually, the merchant accepts the credit card payment through his or her point of sales device and is funded by the credit card processing company, usually by the next business day. However, if a business owner determines that he or she needs a loan in order to expand the business or cover current operating costs and does not qualify for a traditional business loan product, he or she can get a credit card processing loan.

Credit card processing loans allows a business owner access to a lump sum of cash in exchange for future credit card processing deposits. In a sense, this is not a traditional loan product, but a cash advance type arrangement. Here’s how it works:

• A business owner who accepts credit card payments in their business locates and applies for a credit card processing loan through a credit card processing lender.
• He or she receives approval for the loan, which is based on monthly credit card processing volume instead of traditional credit underwriting guidelines such as credit history and score.
• The proceeds of the loan are direct deposited into the business’s checking account, usually in 72 hours or less.
• The loan is repaid with future credit card processing deposits

In most cases, there is no fixed repayment term, official loan payment due dates, or even payment amounts. The lender accepts a percentage of your daily credit card sales as payment against the loan until the principle balance plus interest and fees are paid.

There are several benefits to getting a credit card processing loan over a traditional bank loan. These include:
• Easy qualification terms. Most credit card processing loans do not require a business to meet specific credit guidelines with the exception of unresolved bankruptcies.
• Fast access to the cash. In most cases, approval for the loan occurs within 24-48 hours and funding occurs anywhere from 3-5 days from the date of application.
• There is no collateral required-this means that the business owner does not have to pledge any personal property against the loan to reduce the risk of default. However, he or she will have to pledge future sales against the loan to ensure repayment.
• In most cases, the loans are automatically eligible for renewal after repayment. This means that if you find that you need additional working capital, you can take out a new loan the day after your existing loan is repaid.

In order to qualify for a loan, you will have to meet a few certain criteria. These include:
• Your business will need to have been established for a minimum of 4-6 months prior to applying
• You will need to accept credit cards in your business for payment
• Your monthly credit card volume will need to meet the lender’s minimum requirements, usually $3500 to $5000 in monthly volume
• Some lenders will require that you have some documentation that supports you will remain in business for at least a year from the date of your application, such as a business lease.

These criteria may exclude some businesses from being able to obtain such a loan, however the relatively loose underwriting criteria means that most applicants will have access to the money they need to keep their businesses going. Your loan amount will depend on your monthly credit card processing volume, meaning that the more you process, the more you will be eligible for. However, new customers should expect their loan terms to be somewhat lower than a returning customer.

Over the past 6 – 12 months the small business lending community has seen a significant shift in lending programs to these ACH debit programs.  These programs are set up in a couple of different ways, but the common denominator is that they are all paid back by the lending company debiting payments directly out of the borrowers bank account on a daily basis.  Some companies do this by setting up a fixed daily payment that is agreed upon before the funds are sent out, while others agree to debit a fixed percentage of all deposits made into the bank account (also agreed upon upfront).

Unlike traditional lending programs, these are based heavily on the specific cash flow of the borrower’s business.  Daily payments are a blessing for some business owners and a curse for others.  Many business owners have trouble managing large monthly payments and having the lender debit their bank everyday is more manageable from a planning standpoint.  The payments are smaller and more frequent so it is easier to plan for them to be a part of everyday business, while a once a month payment can come at an inopportune time and late fees can accrue quickly.  The business owner is also generally in charge of making sure the payment is made, not the other way around.

Still, the daily payments are more difficult for other business owners who rely on their everyday cash flow to purchase inventory and manage bills, and a monthly payment is more palatable.  However, the lending community has shifted to this model because it puts the control in their hands, and they are likely to know about a problem more quickly than they would with a once a month payment schedule.  This type of lending has quickly replaced merchant cash advances as the primary business funding alternative to a traditional bank loan product.  It can work for a much broader audience and doesn’t require anything in regards to merchant accounts and merchant processing history.

In fact, many cash advance providers have begun offering a program in line with this need to better serve a wider variety of clients.  It has proven to be a productive program on both ends and many business owners who qualify for traditional loans or merchant cash advances are opting for these daily ach debit programs.  They are more difficult to qualify for than traditional cash advance programs, but many business owners like that it has nothing to do with their credit card processing.  Furthermore it allows those cash advance providers to reach businesses where credit cards are not a primary form of payment, which has opened the doors to increase the lending pool by a great margin.

If you’re a business owner and are interested in getting some money for your business, then inquire about our loan programs, particularly the ach debit based loans so that you too will have a chance to take advantage of the newest loan product available on the market today.

There’s a lot of talk in the news and around the world regarding the state of the global economy.  Many people trace back the problems to the US mortgage crisis, but its difficult to ignore the debt problems and commodity issues around the world.  At the end of the day, money is tight for 99.9% of the world and there’s just no easy solution that can be mutually agreed upon.  Analysts, strategists, and financial planners are doing their best to predict where this winding road will go in enough time to steer the ship in a more favorable direction, but the situation we are currently in is unlike any other in history and we are all learning as we go.

From our perspective, we see a lot of small businesses struggling to get by.  Most suppliers and vendors have eliminated credit terms and raised prices to maintain certain standards in their own businesses and this has put a squeeze on many business owners.  In addition, consumer spending continues to walk a fine line.  Many business owners are also hesitant to take on any debt during this time for fear that it could create a cash flow issue somewhere down the road, and it is this concern that I’m most inclined to address.  Fear is a powerful motivator, but it can also paralyze us from acting.

While it may seem like wisdom to be cautious of entering into a financing agreement, the way the economy grows is through small business expansion and lending.  You may be able to maintain the status quo for a while, but eventually improvements will need to be made, renovations perhaps, and its important to continue to update product lines and services to better serve your clients.  All of these things cost money and unless you have a surplus laying around, you will probably need financing at some point in the next few years.

As is understandable, lending markets continue to tighten up and for many companies, existing, performing accounts are the only ones getting money anymore.  Securing a reliable business funding partnership is almost more important than the financing itself.  When the economy goes bad, history, and comfort go a long way towards rebuilding, which is why it is so important to establish a funding partnership now, before the economy gets worse, or before lending availability dries up.  So even if the need for funding is not immediately present, it may be a good idea to secure a partnership with a lender now so that when you do have need, you will have a place to turn for quick and easy funding.

There are already a number of lenders in the market who are not accepting new applications and are only servicing existing clients, and they are the businesses that are most likely to survive any economic turmoil thanks to the partnership.  We have excellent loyalty programs at Sure Payment Solutions and work tirelessly for our existing clients as much as we do to create new relationships.  So don’t hesitate to establish a partnership with us, it promises to be mutually beneficial for years to come as we weather the economic storm together.