Merchant Cash Advances Are Readily Available and Are Unsecured
With the financial market still on the ropes after the sub-prime mortgage debacle, businesses are acknowledging it is harder than ever to be qualified for a typical bank loan. Merchant cash advances, could be a great solution. A quick approval time, reasonable advance totals of up to $250,000, and a flexible remittance plan are all benefits for obtaining this alternate course for necessary cash.
But, a small business owner would be wise to look at more than just the capital they can acquire. The North American Merchant Advance Association (NAMAA) has a list of best business practices in which they approve for providers offering merchant cash advances. Assuming the company offering you a business loan or factoring agreement does not follow these practices, it is more than likely best to inquire elsewhere. The practices are as follows:
? Illustrate clear disclosure of fees - NAMAA does not look fondly at closing fees as a part of the application process of merchant advances but believes that any such fees be clearly understood and provided up front. The repayment total will need to be completely explained and chosen prior to finalizing the agreement.
? Provide clear disclosure of recourse - Actually, merchant advances are not loans, alternatively they are a purchase of future credit and debit card receipts. Therefore, the merchant could be held personally accountable for any monies not returned if the merchant chooses to breach the agreement.
? Be sensitive to a merchant's cash flow - A standard arrangement consists of the CEO repaying a specified percent of credit card receipts each month.
? Promotional documents disclosure - All marketing materials should make it transparent that the program is one of factoring, not a loan.
? Stay on top of Sales Agents/ Brokers - Merchant advance providers ought to be certain that their sales agents or brokers are properly presenting the product.
? Appropriate payoff of outstanding small business loan balances - assuming a business decides to take an additional advance with a new funder the new amount will need to immediately pay off the previous balance rather than trusting the owner to pay off the balance.
But, a small business owner would be wise to look at more than just the capital they can acquire. The North American Merchant Advance Association (NAMAA) has a list of best business practices in which they approve for providers offering merchant cash advances. Assuming the company offering you a business loan or factoring agreement does not follow these practices, it is more than likely best to inquire elsewhere. The practices are as follows:
? Illustrate clear disclosure of fees - NAMAA does not look fondly at closing fees as a part of the application process of merchant advances but believes that any such fees be clearly understood and provided up front. The repayment total will need to be completely explained and chosen prior to finalizing the agreement.
? Provide clear disclosure of recourse - Actually, merchant advances are not loans, alternatively they are a purchase of future credit and debit card receipts. Therefore, the merchant could be held personally accountable for any monies not returned if the merchant chooses to breach the agreement.
? Be sensitive to a merchant's cash flow - A standard arrangement consists of the CEO repaying a specified percent of credit card receipts each month.
? Promotional documents disclosure - All marketing materials should make it transparent that the program is one of factoring, not a loan.
? Stay on top of Sales Agents/ Brokers - Merchant advance providers ought to be certain that their sales agents or brokers are properly presenting the product.
? Appropriate payoff of outstanding small business loan balances - assuming a business decides to take an additional advance with a new funder the new amount will need to immediately pay off the previous balance rather than trusting the owner to pay off the balance.
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