3 Considerations When Choosing Business Cash Advance Companies


Jeffrey Bumbales

When a traditional bank loan is not an option, today’s small business owner must find creative ways to fund their business needs. The solution? Many are turning to a business cash advance. But not all business cash advance companies offer the same level of service, options, or ease.

According to about.com, banks have tightened their lending guidelines since the recession, and their new guidelines typically exclude many small businesses from qualifying. So, if you have been turned down for a conventional small business loan, you are not alone.

Thankfully, an innovative solution has emerged from the void left by banks. The business cash advance is now a well sought after method of funding that answers to the needs of small business owners.

Considerations When Choosing a Business Cash Advance Company

A business cash advance, also known as a merchant cash advance, is an unsecured advance on your future earnings, which allows you access to tomorrow’s business sales, today. It is not a loan, so your credit score is not typically a factor in the approval process. You will not be asked for an extensive history in business, valuable collateral, or a copy of a detailed business plan.

But, before you apply for a business cash advance, it is important to know that not all companies are created equal. You need to find the right company for you and the future of your business.

  • Look at the fine print: Some business cash advance companies have hidden fees in their funding agreement. If the fee is listed as a percentage, take the time to find out exactly how much you will be paying the fee.
  • Avoid Credit Card Offers: Cash advances through a credit card company are typically very costly and not the same products as other types of business cash advances. Your interest rate will be much higher than your purchase APR on your credit card, which means it can be as much as 25 percent or more. There is also no grace period, meaning that the interest gets tacked on from the moment you withdraw the cash. According to entrepreneur.com, you can typically expect a much higher interest rate than if you went through an actual business cash advance company and this avenue can be very costly during the duration of your remittances.
  • Look for flexibility: Some companies require that your obligations be a predetermined or set amount. Look for a company that builds in flexibility. You never know when a slump or slow period will hit your business, and you want to be assured you can always make remittances.

Finding the Right Cash Advance Company

There are a few must-haves that will help you choose the right company to work with now and in the future.

Find a Company That:

  • Bases approval upon your volume of sales and the overall potential of what you have created or are in the process of building within your business.
  • Offers an easy online application process. You may be asked to include a few bank statements, but typically, that is all that is required.
  • Gives you an answer to your application within a couple of days.
  • Offers flexibility in financial obligations of the advance you receive, typically based upon a small, set percentage of your business’s daily credit card processing receipts. Since your remittances are not a set amount, your business can go through slow periods and your obligation will adjust accordingly.

According to bizfinance.com, business cash advances are the leading funding solution chosen by small business owners seeking easy terms and limited requirements. But, it is vital to know exactly what you are agreeing to when you apply and that the terms actually make sense for your business and its future success and growth.

Qualifying For a Cash Advance

A business cash advance offers many benefits, but you need to find the right company to provide it. The main considerations when choosing business cash advance companies should focus on how well the option will work for you and your particular business needs.

For modern, creative business funding solutions contact Credibly today. We provide cash advances, working capital loans, and business expansion loans to provide our clients with a financing solution for any situation. To learn how much you qualify for, fill out our online prequalification request form. Submitting is free and easy and will not negatively impact your credit score.