Business Cash Advance: True or False

You have probably heard a lot of gossip about them. But before decide to apply for a business cash advance, it is important to know what is true and what is false. Below is a list of things you may have heard about the business cash advance. Can you guess which statements are true and which are false?

If I apply for a business cash advance, I can have my funds in two weeks.

TRUE:
Most business cash advance providers can approve an application in 48 hours. A complete application consists of the initial, two-page cash advance application, the last four months of the applicant’s merchant statements, a copy of his/her business lease, a copy of his/her driver’s license and a voided business check. Once the application is approved, some providers can fund the merchant’s account in as little as five business days.

The business cash advance is only for business owners who cannot get bank loans.

FALSE: The business cash advance is an excellent business-funding alternative for small business owners who do not qualify to receive bank loans. However, even small business owners who are eligible for bank loans can benefit from the business cash advance. Merchants who need fast cash can choose the business cash advance instead of a bank loan. Cash advance providers can fund accounts in as little as five days after approval, while the bank loan process can take up to several months.

Also, even small business owners who already have bank loans can receive a business cash advance in addition to their bank loans, should they need extra business funds.

My repayments will not come out of my own pockets.

TRUE: Small business owners are not responsible for repaying their business cash advances, their businesses are. Rather than forcing merchants to make fixed monthly payments, providers automatically deduct a small percentage of a business’s daily credit card sales to repay the advance. This repayment method allows the payments to become flexible and adjust themselves according to the amount of sales that the business’s processes every day.

If I get a business cash advance, my provider will definitely put a lien on my business.

FALSE: It is important that you choose a business cash advance provider that specifically states that a lien will not be placed on your business. Yes, some providers will place a lien on your business, upon funding a business cash advance. However, the best business cash advance providers will not.

Startups cannot use business cash advances to fund their businesses.

TRUE: The business cash advance is not for startup businesses. This is particularly due to the way in which business cash advances are repaid. A small percentage from a business’s daily credit card sales is automatically deducted to repay the business cash advance. Furthermore, providers view the last four months of a business’s merchant statements to determine how much to advance them. Merchants who do not have a track record and have not yet started processing credit card sales cannot receive a business cash advance because they will not be able to repay it.

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