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Cash Advance as an Option for Small Business Finance

Small business owners often find themselves pushed against the wall due to shortage of funds, and being unable to secure a loan for their business. This problem is even more pronounced in startup businesses which have yet to establish a credit record or show spiraling sales.

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Small business owners often find themselves pushed against the wall due to shortage of funds, and being unable to secure a loan for their business. This problem is even more pronounced in startup businesses which have yet to establish a credit record or show spiraling sales.

The cash crunch can be attributed to their inability to fulfill all the preconditions set by banks to sanction small business loans. In such situations, cash advance is a more viable option and gets amounts up to $250,000 in less than a week. A cash advance is simply cash borrowed against one’s credit card limit.

It is very easy to get a cash advance from banks and other private financial institutions. Many institutions require that:

  1. The business is registered in the United States
  2. The business has the facility to accept credit cards
  3. It processes a minimum of $2500 in credit card sales.

Cash advance facility comes with a series of benefits like:

  • Almost immediate access to cash – funds are released in less than a week. So there is no waiting period which can often be damaging for the business
  • No detailed or complicated paper work- banks demand all kinds of documentary evidence to process a loan application to establish the track record and credit history of the borrower, while a cash advance does not demand any such documents
  • No collateral required – It is offered without any asset having to be placed in the lender’s hands. This is why it is called an unsecured cash advance.
  • Offered even to those having a bad credit history – it is granted on the basis of future credit card linked sales, so the past record has no impact on the sanctioning of the advance.
  • No fixed repayment schedule. Many lenders accept smaller installments during lean periods of the business.
  • Repayment linked to the sales volume on credit cards, and a small amount is deducted towards repayment of the advance.
  • Does not require submission of tax returns or other financial documents
  • No restrictions imposed on the use of funds for specific purposes
  • No penalties or fees deducted, and no closing costs involved.

Cash Advances are linked to future receivables of the business and hence are offered to all those who have promising future sales. The past record becomes insignificant, unlike loans which expect a good past record. With a success history behind, cash advances are sanctioned to 90% of the applicants. Online applications make the process quicker and simpler.

A cash advance is not considered a loan in any way. In fact many consider it to be a form of credit card factoring. That is, the business trades a small percentage of its future credit card revenue for quick cash in hand to meet the cash flow requirements of the business.

Hundreds of private financiers offer cash advances to businesses. While each of them may have some specific requirement of information, a cash advance is by far the easiest route to getting quick cash to handle emergencies with no restrictions imposed on its use.

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