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   ARTICLE   |   From Scotsman Guide Commercial Edition   |   February 2008

Take Advantage of Advances

Help connect borrowers with quick working capital

Offering alternative-financing options in the form of merchant cash advances is a great option for brokers trying to expand their businesses.

These are programs that provide a cash advance against future sales for retail business-owners who need capital. For example, a merchant-cash-advance program can offer businesses $75 today for $100 of future sales.

As a broker, you can be the liaison between the cash-advance financier and your business-owner clients. Start by having a merchant-cash-advance company train you and your office staff. Within a few days, you and your team can prospect a lead and help fund the cash advance to the business-owner. An average cash advance is $25,000. These are simple commissions for your office.

Many merchants renew their advances annually. As a result, you may see residual business for your company.

Who qualifies?

Generally, applicants must be a traditional retail or restaurant business and have at least one year remaining on their lease. Their business should be established for a set time and have no open bankruptcies within the past year or so.

Approved business-owners have to provide credit card and bank statements and a copy of their lease to the cash-advance company. No personal guarantees are required, and funding is available with minimal paperwork. A funding consultant will determine how much money the merchants qualify for based on their average monthly credit card volume. After the complete contract is submitted and approved, funding can sometimes begin in as quickly as one business day.

Merchants can use the advance in a variety of ways, from opening a new location to paying taxes. A cash advance is ideal for retailers in many situations -- whether they’re struggling to meet payroll, looking to expand inventory, wanting to advertise or needing to pay operating expenses. It is also a helpful resource for small businesses that experience seasonal or cyclical fluctuations.

What’s the fine print?

Making good on the cash advance requires only a small, agreed-upon percentage of the merchant’s daily credit card sales until the advance is made whole. When a merchant is experiencing a slow period, the amount deducted is scaled accordingly.

Businesses will receive their advances automatically and electronically as is done with credit card deposits. The amount of the advance is based on the merchant’s average monthly credit card volume. There is no fixed time or schedule of repayment and no fixed interest.

The merchants are only paying a part of what they are earning. The stress of repayment can be nonexistent because the deducted percentage is not a fixed percentage of credit card sales. If all goes well, the process for your borrowers should be simple.

This program is one of the fastest, easiest ways for struggling businesses to get capital. Merchant-cash-advance programs offer a way to improve the future of small businesses by allowing them to access much-needed cash now.

By offering this program to borrowers, you can benefit in two ways. First, it can keep your doors open for business development. Second, it may allow you to bring in new clients and to regain the trust of current clients.

Best, it has no hidden charges, and training is provided.


 


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