Credit Card Advance
Business and personal use are the two main types of credit card advances.
The personal type ranges from cash amount of 100 to 1000 dollars and are being paid back within a short amount of time such as a month coupled with interest and other small fees. It is usually referred to as a ‘payday loan’.
On the other hand, the business credit card advance type (which is often referred to as merchant loan or business cash advance) is pretty much different from a payday loan.
A merchant loan lender buys a small portion of the your future credit card sales given with a discount which is based upon the amount of credit card sales your business is able to haul in per month. They will then program their system to deduct a percentage of your daily credit sales to pay in advance for your credit card purchases. Because the amount of money is dependent on your daily sales, the payback amount being paid daily differs from day to day. This is called the flexible pay back schedule. By employing this system, you are able to regulate your payment less on slow days and more on days that are busier and haul in a much larger income. The time frame for the payback ranges from 6 to 9 months. Many businessmen use this funding method if they are not able to obtain a loan from a bank or they cannot afford to wait for the time it takes to have a bank loan made.
Credit card advances are more expensive than bank loans but they have perks that outweighs the setbacks. Some of these are as follows:
-People are immediately funded in matter of days instead of waiting for months.
-No collateral items are pawned or left in order to make loans.
-There are no terms or agreements needed on how the borrower chooses to spend the money.
-Lenders will try to look up for credit score but not much weight is given on poor credit history.
Not everyone can avail this type of financing, make sure before applying for one, you are able to comply with the requirements.
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Categories: Loan Articles Tags: able, Credit Card, credit card advance, days, loan, sales
Business Loans For People With Bad Credit
When you have your own business you may come upon times where you’re up against an unexpected situation and need a bad credit business loan. In most lending situations your first choice would be to talk to your regular bank or another local bank. While some will recommend that you skip this step to save time, I generally think it is a good idea to continue to build a strong banking relationship with one bank.
Another option is through a factoring agreement. You contract with another company to give you money now at a discount rate based on anticipated future sales. Sometimes this can be done with outstanding invoices or even work in progress. Another possibility, if you have a credit card merchant account, is to use the expected monthly credit card sales numbers. You probably have an average amount of credit card sales that can be trusted as future revenue. This means you have low risk in receiving this future income stream.
The key is to present the factoring company with your past credit card processing statements. This is the evidence you need to prove future income and get a business cash advance.
Factoring will get you the money you need now. Since the repayment schedule is based on your revenue volume you don’t have to worry that the payment schedule is too much too fast. The factoring company does not want to put you out of business. They want you around to pay your obligations. Typically the advance is rather short-term which may have a repayment of 6 to 12 months. Once paid back new revenue is available for business growth.
Here’s an example. Let’s say you get a factor of 1.3%. This means that on a $10,000 cash advance you would be paying 30 cents on the dollar by the time you pay it back. That is, your $10,000 borrowed becomes $13,000. Then the hold-back defines how much is kept until your balance is paid. In this same example, if the hold-back is 15%, then 15% of your future credit card sales go directly to the factoring company each day. Looking at this on a monthly basis, let’s say your monthly credit card sales are $12,000. 15% of $12,000 is $1,800. That would mean that $1,800 per month will go to the factoring company. You will have paid off your obligation in just over 7 months.
Categories: Loan Articles Tags: Bad Credit, bad credit business loans, bank, business loans, months, poor credit, poor credit business loans, sales, schedule
Things To Know About Credit Card Advance
The personal type could range from cash amount of 100 to 1000 dollars and are paid back within a little amount of time like a month coupled with interest and other small fees. It is known as ‘payday loan’.On the other hand, the business credit card advance type, also known as merchant loan or business cash advance, differs from a payday loan.
A merchant loan lender buys a tiny portion of your future credit card sales that comes with a discount, and it depends on the amount of credit card sales your business can rake in per month. The, they will program their system to subtract a percentage of your daily credit sales to pay in advance for your credit card purchases.
Considering the amount of money depends upon your daily sales, the payback amount being paid daily varies on a daily basis. This is known as flexible pay back schedule. By making use of such system, you can regulate your payment less on slow days and more on days that are actually busier and haul in a bigger income. The time frame for the payback can be from 6 to 9 months. A lot of businessmen use this method if they cannot obtain a loan from a specific bank or they cannot afford to wait for the time it takes to have a bank loan made.
Credit card advances are costlier compared to bank loans but they have benefits that outweigh the setbacks. Some of these are the following:
Consumers are instantly funded in just a matter of days rather than waiting for months.
No collateral items are pawned or left just to make loans.
No terms or agreements are needed regarding how the borrower will spend the money.
Lenders will try to look up for credit score but not much weight is given on poor credit history.
Not all people will be able to avail of this type of financing. See to it that before applying for one, you can comply with the requirements.
Categories: Loan Articles Tags: bank, credit advance, credit card advance, days, loan, sales