Questions about Credit Card Factoring

When embarking upon a new business financing method, such as credit card factoring, a merchant is bound to have questions. These questions and answers should help you determine whether credit card factoring is your best business financing choice.

What is credit card factoring?

Credit card factoring is a business funding method that is based on a business’s processing of credit card sales. Small business owners sell their business’s future credit card sales to a credit card factoring company. The company then gives them an advance of up to $500,000. Then, the advance is repaid as the business processes daily credit card sales.

Who can use credit card factoring?

In order to be eligible to take advantage of credit card factoring, merchants must meet certain requirements, which include:

- The business must process at least $3,500 in monthly credit card sales
- The owner may not have unresolved bankruptcies
- The owner must have owned the business for at least six months
- The business must have at least one year remaining on the business lease

Business owners who meet these requirements may proceed to the application process. They must complete a two-page application and submit it to the provider. They must also submit the last four months of their merchant statements, a copy of the business lease and a voided business check.

Why would I choose credit card factoring?

There are many reasons why a small business owner would choose credit card factoring.

1. You do not qualify for a bank loan.

The requirements for a credit card advance are much easier to meet than those of traditional business funding methods. To take part in credit card factoring, your credit score does not need to be excellent, you do not need collateral and there are no restrictions on how you can use the funds.

2. You need cash fast.

Credit card factoring companies can approve applications in 48 hours and wire funds into accounts in as little as seven business days after approval. You can also renew your funds about every four months, without completing any more applications.

3. You want flexibility in your repayment.

Since credit card advances employ credit card factoring, the repayments go with the flow of your business.

Who offers credit card factoring?

There are various credit card factoring companies for merchants to choose from. When choosing your provider, it is important that you choose one that is willing to answer all of your questions and work with you to get the cash you need for your business. When choosing a provider, make sure that their funds are unsecured and they only deduct a small percentage of your business’s daily credit card sales for repayment.

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