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Why Canadian Merchant Cash Advance And Business Credit Card Loan Facilities Are Popular forms OF Small Business Finance

Guest post by: Stan Prokop

Article Overview: Information on Canada’s newest form of small business financing, the merchant cash advance . Monetize future business sales today against a credit card monetization loan facility . Cash flow for small business !

Why Canadian Merchant Cash Advance And Business Credit Card Loan Facilities Are Popular forms OF Small Business Finance

There certainly aren’t countless options for small business, retailers, restaurants, etc for achieving working capital and business financing success in Canada

So let's discuss the new and up and coming kid on the block, who goes by a variety of creative names - including but not limited to : merchant cash advance , small business loan, and credit card advance sales loan.

What are these facilities, how do they work, and are they perhaps tailor made for your short and intermediate term cash flow and working capital needs.

The merchant cash advance became popular clearly as a result of businesses such as yours, probably retail in nature who have seen traditional sources of financing either disappear, and quite frankly perhaps weren’t even there in the first place!

While this form of financing is more expensive than traditional financing, as alternative financing goes, it does the trick, providing you with working capital and cash flow based on future sales.

And we can assure you that we spend a lot of time with clients carefully explaining that it’s not a loan per se that brings onerous debt on to your balance sheet. You are simply receiving an ' advance ' against future sales. Other commercial business makes sales, and then immediately finance their receivables to generate cash flow. In the case of your business, either a retail establishment or a restaurant ( basically any business that takes credit cards on a regular basis ) your are simple cash flowing those future sales, getting funds today, and repaying the advance via a percentage of future sales that you feel confident will be made .

Using a simple example, if you are advance , again just as a example here, $ 10,000.00 for your working capital needs a per cent age , typically 10 -30 per cent of future sales is used as a repayment of that advance your firm has just been provided with . Where this works best is if you have a solid credit card sales revenue model, and your have solid gross margins on your services, products, etc.

So is it a good idea for you firm? Well, certainly as we said, it’s a newer form of alternative financing. In most cases we see when discussing the options it is clear to all parties that traditional bank financing options have been fully exhausted. As we said, thousands of firms sell and finance their receivables - all you are doing is selling and financing a portion of your future sales - so for many it does make sense.



And by the way, it’s clearly a form of financing that is unsecured, because the collateral is in fact future sales that hopefully will materialize, but might not!



A good rule of thumb we use is that it’s an excellent short and intermediate finance strategy. Over the longer term you should be working on a long term strategy to probably finance your business.

A merchant cash advance business credit card loan is also very easy to achieve. The main focus is your ability to demonstrate your sales revenue via bank or credit card processing statements. Small business owners can expect of course to be a guarantor on this type of unsecured loan financing.

So, that’s the offering. If you are scrambling on a daily basis in a retail or restaurant type business environment speak to a trusted, credible an experienced Canadian business financing advisor about merchant cash flow advance financing.

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Article Tags: business, credit card, loan, merchant cash advance



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