Rapid Merchant Funding Blog

by RMS

Many types of businesses easily qualify for a Merchant Cash Advance.
While everybody says about their products, in this case, it is honestly true…we have always had an extremely high percentage of our applicants qualify. Why? Simply put, it is because we are able to evaluate risk differently than other financial providers.

The main requirements of a Merchant Cash Advance applicant are to own a business and to process credit card sales. Each Merchant Cash Advance provider will have additional requirements, usually centered on the business’ operations.

Most small business owners will find the qualifications of a Merchant Cash Advance much easier to meet than the requirements associated with traditional financing options. That’s what small business owners are telling us—that they appreciate less hassle, less paperwork, and the fact that Merchant Cash Advances are more flexible and responsive than traditional options.

So in general, businesses that accept a specified amount of credit and debit card sales are the ones that qualify. This means they might be restaurants, retail shops, florists, spas, salons, dental or medical offices, or any number of small business types. Some will be franchises, some will be multi-unit enterprises and some will be single Mom-and-Pop establishments. It could be almost any business in almost any industry.

What makes a difference?
Like us, most reputable Merchant Cash Advance providers will review some measurable variables that tell them more about you and how your business works.

Common things for most providers (including us) to review are the time in business, current status with a landlord, the average credit card activity for 4-12 months, and the status of other current financial obligations. These variables, in large part, determine the specifics of each deal.

With a Merchant Cash Advance, your credit score will matter significantly less than it would if you were to apply for a loan. It is one characteristic of a Merchant Cash Advance that many business owners have said that they really appreciate.

Does this mean everyone who applies gets approved?

No. But many who do apply will get approved…and almost all of these qualified applicants will have less than perfect credit scores.

While the credit score of each applicant is reviewed as part of our process, it is not very often going to be the sole hurdle. We have helped lots of people with bad credit scores and lots of people with good credit scores. We handle each case on an individual basis. Our ability to analyze and assess the unique risks of each specific application allows us to look beyond a credit score.

by RMS

While there can be many uses for a Merchant Cash Advance, the best are those that directly fuel small business growth. Ideally, you want to use the money you receive to create or build on an opportunity to make more money.

There are many examples of this seen in published Merchant Cash Advance success stories. If you own a restaurant, you can add seating, or perhaps expand your hours of operation. Add a new piece of kitchen equipment or expand the floor plan to accommodate more guests. Because of the increasing costs of food and fuel, many restaurateurs are considering menu revisions or concept repositioning to stay competitive and profitable in today’s economy.

A retail store could expand product lines or invest in new marketing. Create advertising that brings in new customers, or offer new services to your existing clientele. Increase the amount of products in your store or add another check-out counter.

An automotive repair or after-market installation business could invest in new equipment or training that offers more services to the clientele. It could buy a new truck and radios or cell phones to provide emergency services.

In each example, the business invests in a way to increase revenue generating activities, and this is a smart way to spend the proceeds of a Merchant Cash Advance. Use the money to create or take advantage of an opportunity and you are typically using it wisely.

Look At the Long Run

If you are considering applying for a Merchant Cash Advance, as like any important decision, you should identify how it will benefit you in the long run. Merchant Cash Advances are more expensive than other forms of raising working capital, such as loans or leases. If a long-term return is not clear, you may want to reexamine your motives for choosing this option. It’s best to match your need to the right type of funding whenever possible.

A Merchant Cash Advance is best used to invest in progress. Because this is not typically the most inexpensive option to evaluate, the ends should clearly justify the means. When they do, a Merchant Cash Advance can often be used as a smart and simple solution for securing the capital to begin many growth strategies.

By Jason Belmont

Many business owners might think that a merchant cash advance is not for them when they need funds. Here we consider merchant cash advance funds advantages over getting money through a bank.

Requirements

Increasingly, banks are more and more strict in terms of lending guidelines. If your credit is not over 700 then it is not easy to get an unsecured business loan. Merchant cash advances are not likely to be declined on account of credit score

Secure vs Unsecure Loan.

A bank loan typically appears on one’s personal and business credit reports. Some loans would even require collateral such as being secured by one’s home. Such loans also appear as liens on ones business. Merchant cash advance money does not appear on one’s credit nor as a lien on one’s business. Also, since the loan is not apparent to other creditors ones debt-to-income ratio is unaffected unlike with a bank loan.

Flexible vs Inflexible Payback

Bank loans are paid back with the same payment each month. If you miss a payment because of a poor month then your credit suffers and you are likely to face fees and penalties. With a merchant cash advance the money typically comes back as a percentage of ones income and so would go down as your income falls. Therefore there is no chance of penalties nor credit damage.

Funding time

Bank loans typically take weeks and weeks to fund. Merchant cash advances take typically 7-10 business days!

Cost

Bank loans typically have significant origination and other fees tacked onto the loan amount. Moreover, business loans are likely to be high interest, often over 20% APR. If you take the full term to pay off the loan you are likely to pay the debt off 2 to 4 times over. The bank loan may have a prepayment penalty to prevent you relief from paying huge amounts of interest. There is also the risk of additional penalties. With merchant cash advances you will pay the debt off faster and with much less fees than paying back a traditional loan.

Overall merchant cash advance is often a good option as compared to a traditional loan.

by Mark Wilson

As most merchants are probably aware, the processing of Visa or MasterCard credit cards are conducted by sponsored “underwriting” card acquiring banks. This payment processing environment is regulated by rules promulgated by the aforementioned card associations of Visa and MasterCard.

These two card labels are actually associations of various (card issuing) banks and every year they redefine rate categories, decide on rate changes, and periodically modify the rules and regulations of their industry. Most of these regulations are designed to reduce the risk value inherent to the credit card industry, and as the types of risk in the environment change this is reflected in the alterations to the rules, regulations, and rate definitions.

One of the longest held rules is that of both Visa and MasterCard to prohibit the occurrence of “factoring.” This term refers to an approved merchant processing the (credit card) sales of a non-approved business through their merchant services account. By “approved” I am referring to a merchant (whose definition would include the business type, the business in particular, and the owner or principles themselves) that has been evaluated for risk by a particular card acquiring (i.e. payment processing) “underwriting” bank and approved for handling its credit card sales processing.

Although the majority of the industry considers factoring as the most obvious use of the term (i.e. one particular business owner running the sales of another completely different person’s business through their merchant account), the most common occurrence of factoring actually occurs within a single corporation or small business owner’s group of companies. Not aware of the definition of factoring, the individuals involved in establishing the new business entity considers the first merchant account sufficient.

By Dezzi Rae Ascalon

If you’re an entrepreneur, having an extra Cash could do a lot for your business. You could buy more inventory, purchase new equipment and furniture, open another office, step up your marketing, pay employee salaries. The list goes on and on.

The only thing is, 92% of business owners are refused loans from traditional lending due to lack of collateral, insufficient time in business or the business owner has less than perfect credit. At a time when it’s almost impossible to get a business loan from a bank, where does a struggling small to mid-sized business go?

The answer may lie in a merchant cash advance. Providers of merchant cash advances give small and mid-sized businesses the working capital they need in order to expand and grow their businesses. As opposed to traditional lending, no collateral or personal guarantee is required. Instead, a merchant cash advance provider purchases a portion of a business’ future credit card sales. These assets, which traditional lenders overlook, allow business owners to access capital quickly and easily without leveraging their homes or personal assets.

With a merchant cash advance, even if a business owner’s credit is less than perfect, they can get the cash they need for their business within 10-14 days. Thanks to a revolutionary approval method for business financing, there are no personal guarantees, no credit application fees and points, no traditional collateral, no fixed payments, no hidden fees , no balance sheet entry needed, and the business owner can choose their payment plan and use the cash any way they see fit.

While there’s a 95% approval rate, there are nevertheless a few guidelines that must be met. For instance, a business owner must be current with their landlord and have no open bankruptcies in the last 12 months, they must have a merchant account processing Visa and Mastercard for at least 6 months and they have to have been in business for at least 6 months with a Visa/Mastercard volume of $3,000 per month.

BY RMF

The initial question a lot of people are asking is what is a merchant cash advance? An established business in existence for one year or more with visa and mastercard sales can qualfiy for a loan or a merchant cash advance on their past activity up to $150,000 from a financial institution and $250,000 or more per location from a true merchant cash advance company. The monthly average of their visa and mastercard sales x 1.5 will be a qualifying amount that the lender will fund up to. Here is an example for you, assuming your business averages monthly $50,000 for visa and mastercard sales over the last year. The financial institution will use that $50,000 x 1.5, therefore your lending base will be $75,000 for this example. Pretty neat, bet you didn’t know these programs were even out there.

There are many merchant cash advance or loan programs available. Some are in a the form of a loan and others are in the form of a merchant cash advance but the formulas for lending qualification come from the past mastercard/visa sales. Merchant cash advance programs can lend up to $250,00 to $300,000 and their rates of interest can range from 25-40% per annum. Loans regulated by banks are controlled by the banking rules and usually charge lower rates. Obviously, it is important to compare the programs and understand your carrying costs, time to repay the monies back and any other risk factors that you might have.

Other questions to consider are the following, what kind of businesses qualfiy for these type of programs? The following is just a few that would fall under these lending qualifications:

limousine service, automobile centers, beauty and nail salons, dry cleaners, gas stations, retailers of all kinds, restaurants, bar/nightclubs, distributors,dental/medical offices and service providers.

The next question is what are some of features of these merchant cash advances and loan programs:

* Loans or merchant cash advances range from $5,000 to $250,000.
* No tax returns, Financial Statements or Asset Documentation required.
* Up To One Year to Pay back the loan, merchant cash advances between 6-8 months.
* No large fixed monthly payments, you pay a percentage of your future credit card sales so the monies are repaid with the flow of your business cycle.
* Fast Approval, Within two days. Funded within seven business days.
* No Hidden Charges and no late Fees.
* Poor Personal Credit Accepted. This is not FICO SCORE Driven, so credit is not an issue, Prior Bankruptcies No Problem.
* To Pre-qualify, you must own your business for at least one year.
* To Pre- qualify, you must average $3,000 monthly credit card sales.

The next obvious question, is how do we repay back the loan or cash merchant advance? It is from the future card sales, a small portion is paid back each day to pay back the lender. This is important because there are no balloon payments or monthly payments to consider. The lender calculates a small repayment per day that can last up to one year.

How low is the permitted Fico score? It could be as low as 500, but each situation stands by itself.

Additionally, as this loan or cash merchant advance is paid off, your company can reapply for additional funds and continue the process again. This is a great financing program for businesses that have seasonal cash flow or need to use the money for any business purpose, the decision is yours.

by david castro

Merchant cash advances are a great way for small business owners get the funding they need, with a fast and simple process, merchants can be funded with up to $500,000 dollars in as little as 10 days.

How merchant cash advances work?

A lender will purchase a small percentage of your future credit card sales, until the payback is completed and will give you upfront the money your business needs. Often times the business owner will be approved even with a less than great credit history record, making a merchant cash advance a top funding choice.

How do the lenders make money?

Funding charges can widely vary, and that ’s not just from one lender to another, but from one cash advance to another. For example, the payback on a $10,000 cash advance could be as low as $11500 or as high as $14,000 dollars.

Even though there is a fixed payback daily percentage, and because of that, theirs is no fixed monthly payment, you pay as you sell; the payback factor varies depending on your business sales and the amount of money asked for.

If your business is doing well and sales are good, the advance lender collects the money sooner making the payback amount rather high. Since there is no time limit on paying back the loan, the annual rate will decrease as the payments will be extended over time, although the lender typically forecasts a rather short term for payback, it could usually take less than a year.

There are no questions that the merchant cash advance cost for this kind of unsecured funding is going to more expensive than the cost of a traditional loan, but if you understand the advantages of a cash advance and know how hard it would be to qualify for a bank loan, you will find that a merchant cash advance is a great option.

Often, business owners interested in funding programs like this may have a less than perfect or even bad personal credit history. They may have credit history records like past tax issues, a list of delinquencies, collections, liens or even judgments that would be an automatic red flag for a traditional bank loan. Instead, the merchant cash advance industry is here to help businesses that can’t qualify for traditional funding methods.

The lender risk:

There is a rather high risk when providing these types of unsecured funding options (hence the higher cost to the business owner for the money), but they use advanced funding models to determine the possible future credit card sales. They also offer the cash advance with fairly short payback terms to help counter the risk.

Although the approval is much easier than it is with most bank loans, few cash advance lenders will lend to new merchants or start-ups without a history of credit card statements. Even less lenders will approve amounts larger than what the business can predict to earn from credit card sales in a year.

The merchant cash advance lender takes all of the risk, but since it is paid out of projected future sales, it is typically a risk worth taking. Seasonal businesses that need cash flow to move them through slow seasons or merchants, who have an unexpected low season, may find a need for a cash advance until business picks up.
Merchant cash advance lenders say that slow businesses are not the only merchants interested in this funding method. Most types of businesses are often ignored by traditional banking institutions.

There are many times when owners of healthy small businesses could use cash flow or working capital to help build their businesses but don’t qualify for the traditional bank loans. These include franchise owners who have exhausted their personal savings to purchase their franchise and would like to open another one; merchants who can buy bulk inventory at discount rates or move into a new, more efficient location; expansions; new equipment; or simply the desire to move forward on a great new opportunity.

On June 25, 2008, Katie Couric did a story titled, “Small Businesses Take Hit In Credit Crunch” about how Small Businesses are having an ridiculously hard time getting bank loans as a result of the SubPrime Mortgage meltdown. Other Commercial Lenders and banks have tightened up their lending standards and are basically turning away from risk.

“If you question the effect on the economy, take this statistic into consideration: small business represents 70 percent of the job growth in the United States. Without small business there are no new jobs. And if people aren’t working, they aren’t paying their mortgages – or buying homes. Many small businesses need loans to meet payroll or inventory. They too are being denied. ” Katie Couric’s Blog - June 25, 2008

Rapid Merchant Funding (RMF) also recognizes how important small businesses are to the economy and it is for this reason that RMF has LOWERED its minimum Average Monthly Credit Card Sales requirement from $5,000 per month to $2,500 per month so we can help more businesses get the Unsecured Cash they need.

Actually, all of this is a blessing in disguise for those businesses that accept Visa & Mastercard as a form of payment from its customers. The reason is because those same companies will now start to explore other Small Business Financing options available to them and hopefully, take a good close look at a Merchant Cash Advance.

Many small businesses are going to discover just how easy it is to get up to $250,000 or 150% of their Average Monthly Visa & Mastercard sales from companies like Rapid Merchant Funding. These same companies are also going to discover the other benefits of a Merchant Cash Advance such as…

• Flexible Payment Options
• 24-hour Approval Process
• 90% Approval Rate
• No Collateral is required
• Bad credit is NOT a problem
• Rate Stability - Fixed Rate
• Receive the funds in your bank account with in 72 hours of completed application

Another nice thing is that the Merchant Cash Advance does not show up on a Credit Report nor is there a worry about making a fixed monthly payment. This is especially nice during the lean times most businesses have to endure.

When looking for Working Capital for their business most people will start with a bank loan or line of credit. Some will even go as far as to try to apply for a Government Grant. The problem is actually receiving a government grant is certainly no easy task and your business actually has to meet certain size restrictions to even be eligible.

The following is taken directly from the Government Grants website…

Small business loans and small business grants may be awarded to companies that meet the size standards that the U.S. Small Business Administration (SBA) has established for most industries in the economy. The most common size standards are as follows:

• 500 employees for most manufacturing and mining industries
• 100 employees for all wholesale trade industries
• $6 million for most retail and service industries
• $28.5 million for most general & heavy construction industries
• $12 million for all special trade contractors
• $0.75 million for most agricultural industries

Note that about one-fourth of industries have a size standard that is different from these levels. They vary from $0.75 million to $28.5 million for size standards based on average annual revenues and from 100 to 1500 employees for size standards based on number of employees.

In other words your business has to be on the right side of the street so that when the sun comes up at a certain time of the day there is no shadow on your door. Obviously, I am being sarcastic but you get the point.

Let’s take a look at a Merchant Cash Advance and compare it to a Government Grant. The following was taken from the Rapid Merchant Funding website.

Most businesses will qualify. Generally, all you need to show is that you’ve been in business for over 6 months and process a minimum of $5,000 a month in credit card receipts.

Pre-approval usually takes place within 24 hours and funding takes two to three business days depending on the amount of the transaction. Typically, once the agreement is signed, the money will be received as early as the next business day.

The average size of a cash advance is about $25,000, although cash advances range from $2,500 to $250,000.

You are free to use the money in any way you feel is best for your business. Many businesses use it for expansion, advertising, new equipment or increased (or seasonal) inventory. It is also frequently used for unforeseen emergencies or to buy out a partner or acquire a new location.

You may need to change to a preferred credit card processor but the credit card processor you switch to will either Match or Beat your current rates.

According to the Small Business Administration, which oversees the nation’s some six million small businesses, problems in obtaining adequate and timely funding are the main culprits in causing small businesses to fail. As businessmen who have worked closely with many small and medium-sized businesses over the years, we at RapidMerchantFunding have seen first-hand the problems this places on small business owners in managing their cash flow.

Our goal in creating RapidMerchantFunding was to provide funding to small business owners who might otherwise be unable to obtain it elsewhere. Studies, after all, have shown that more than 9 out of every 10 businesses in the U.S. are unable to obtain bank loans because they lack sufficient credit or the necessary collateral.

Let’s face it…all businesses at some time or another need operating cash or working capital for a variety of purposes…

• Pay Bills or Taxes
• Broaden Operations
• Start or Expand an Advertising Campaign
• Remodelling
• etc…

Finding the extra cash isn’t usually a very easy task. Most merchants turn to their local bank for a loan or a line of credit. Most people find this a very daunting and time consuming task for many reasons…

• Mountains of paperwork
• Invasive investigation into your financial history
• Requirement for Personal Guarantees and Collateral
• High Interest Rates
• Endless fees
• Long approval times

Many people go through this long process just to find out at the end that they were not approved and are left feeling not only disappointed but angry as well. Declined Loan Applications happen for a variety of reasons including but not limited to…

• Bad or No Credit History
• Too Little or No Collateral
• Bank or Lending Institution feels the Applicant Lacks the Ability to Pay Off the Loan based on Income

It’s at this point when many people start looking around for alternatives to get the cash they need. The lucky ones have already discovered the speed and ease of a Merchant Cash Advance.

A merchant cash advance is like an Anti-Loan because…

• There are NO Interest Rates
• There are NO Hidden Fees
• There is NO Fixed Payment Schedule
• There are NO Closing Costs
• There will be NO Loss in the Equity of Your Business
• NO Personal Guarantees are required
• There is NO Need to Post Collateral

In most cases the money is delivered to you as a lump sum for use as working capital in return for the purchase of a specified amount of future MasterCard and VISA credit card sales. It is like factoring, a well known process for generating cash flow for businesses, only here cash is advanced based on an event that has yet to happen – your anticipated credit card sales based upon historical performance.

Other Advantages Merchant Cash Advances have over Bank Loans are…

• QUICK & EASY Application Process
• FAST Approvals (With In 24-hours)
• HIGH (90%) Approval Rate
• RAPID Funding (2-3Business Days)
• FREE Use of Funds (No restrictions on how the money is to be used)
• Will NOT show on a Credit Report

In our opinion a Merchant Cash Advance prevails over a Bank loan hands down but ultimately the decision is up to the individual business owner.

1. Additional Locations
   This might not be your best choice for business expansion, but it’s listed first here because that’s what often comes to mind first for so many businesses considering expansion.
2. Franchising
   Allow others to do the work in making your business grow. There are millions of people out there looking to start their own business or be their own boss who don’t really have the know how to get started. In many cases buying into an existing business by way of franchising is the easiest way for these people to get started because it allows them to piggyback off the name and reputation of an established business.
   
   
3. License Your Product
   Licensing your product can be a lot like franchising in that you are allowing others to sell your goods/services under your established name and reputation for a fee.
4. Form An Alliance or Partnership
   Forming an alliance or partnership is a great way to grow your business especially if your new partner’s business happens to compliment your own. For example, if your business produces/manufactures a product you may want to partner with a distribution company. The reverse is also a good option as long as it is a mutually beneficial relationship. Another good partnership would be one where a cash infusion is part of the deal. The new cash could be used to fund other expansion methods.
5. Merge With or Purchase Another Business
   Much in the same way a partnership or an alliance with another business or company can help your business grow merging with or purchasing another company can also have the same effect. The only difference is merging with or purchasing another company adds their products, services, capabilities, assets, and current customer base/market directly to your own.
6. Diversify
   Try selling new products or services. There are two ways to do this. The first is to sell new products/services that compliment your current products/services and the second is to sell products/services unrelated to your current ones. This might be a good option if your current product line(s) are in a declining market, a saturated market, or just in a slump.
7. Target Other or New Markets
   This is much on the same principle as Diversification in that you are breaking out into new areas in search of new customers. The difference here is instead of trying to sell new products you are trying to sell to new people entirely.If for instance you are a local shop that only sells goods and services in one town or city you may want to expand to cover an entire region. Another example would be if you only sell in the United States perhaps breaking out globally or just target one new market like China would be a good option.A company named Benprise, LLC is currently setting itself up to help others break out into new markets such as China or the Philippines. As a matter of fact they currently have field offices located in both of those countries and will be expanding to other markets as time goes on.
8. Expand to the Internet
   “By the end of 2002, there will be only two kinds of businesses: those with an Internet presence, and those with no business at all.” Bill GatesObviously, this was an exaggeration but it still makes a very valid and important point. The internet is a HUGE market and gives even the smallest Small Business the chance to sell to a global market.

   Despite being around for 10 years the internet is still continuing to grow at an increasingly rapid rate and an effective Web site is becoming an integral part of business today.

9. Obtain a Merchant Cash Advance
   Nothing helps a business or company expand quicker than a cash infusion. Cash can be used to purchase new equipment, give your storefront a facelift, start or increase your advertising campaign(s), pay off debt/taxes, hire new personnel to improve customer service, etc…The best parts about a cash advance from a company like Rapid Merchant Funding is- Cash Advance up to $250,000 in 5 to 7 Days!!
   - Advance up to 150% of 6 month avg. credit card sales
   - Approval within 24 hours!!
   - High approval rating of up to 90%
   - No application fee or closing costs
   - Cash Advance does NOT appear on your credit
   - No Interest Rates
   - No Loans, No Fixed Payments
   - No late penalties
   - No Personal Guarantees or Collateral Required
   - No cumbersome and costly paperwork for an application
   - Money to be used for ANY purpose (i.e.— back taxes; improvements; vacation; emergencies.)
   - Ongoing source of capital which is renewable as the advance is paid down or totally repaid
   - Growth capital for business
10. Expand Your Local Demographic Market
    Expand your market reach outward another 5-10 miles by radio, newspaper, TV ads and other mediums.
    

About a week and a half ago the leading companies in the Merchant Cash Advance (MCA) industry have come together to form an industry trade association called The North American Merchant Advance Association.

NAMAA’s purpose is to promote competition and efficiency throughout the industry by:

• Providing education and professional development to its members;
• Developing ethical standards and best practices guidelines for the industry;
• Evaluating and providing education regarding the development and enforcement of intellectual property rights that affect the industry;
• Evaluating and developing improvements to existing business methods and practices;
• Developing industry relevant products and services;
• Engaging in regulatory and legislative advocacy;
• Point of contact for media relations.

This coming together of the industry can be directly attributed to a White Paper released by Advance Me, Inc. on July 2, 2007. One would have to also assume that this initiative was taken to ensure the MCA industry does not follow in the same footsteps as the Subprime Mortgage industry and their well publicized meltdown.

One of NAMAA’s key purposes is to more or less develop the standards the rest of the MCA industry should operate by is run by a Board of Directors consisting of executives from 5 of the MCA industry’s top firms.

NAMAA currently has 10 member companies and Applications for Membership can be found on NAMAA’s website. For more information on membership and application process, click here.

The benefits to becoming a NAMAA member are:

All members shall be licensed to use the NAMAA name and logo to indicate that they are in good standing with the Association.

Other membership benefits include:

• Participation in the NAMAA Annual Meeting;
• Access to proprietary merchant fraud detection tools developed by the Association;
• Access to the membership and exchange of best practice information;
• Access to the Association “MATCH” list of merchants that are not in good standing with other members;
• Industry relevant education and professional development;
• Participation in development of best practices guidelines.

The key benefit of membership would have to be access to the “MATCH” list. Fraud has to be the MCA industry’s biggest challenge and this list would certainly go a long way toward stemming the tide against fraud and have an immediate impact to everyone’s bottom line.

We here in America are on the brink of experiencing a credit epidemic. The quantity of credit card debt is at an all time high and we are nearing what many consider to be a recession. Thus leaving many people with fewer dollars in their wallets and more bills to take care of. In this article I will go over the pros and cons of the various available systems of credit card debt relief.

Merchant Cash Advance:

Pros

• Receive up to $250,000 in 7 days or less
• 90% of Companies Will Qualify and Receive Approval with in 24 hours
• No Application Fees or Closing Costs
• No Interest Rates & No Fixed Payments
• No Personal Guarantees & No Collateral required

Cons

• Must be a “Brick & Mortar” business
• Must be in business a minimum of 6 months
• Your business must consistently average $5000 or more Gross Credit Card Sales per Month

Credit Counseling:

Pros

• Consolidate monthly payments
• Lower APR
• Fixed payment not minimum payment.

Cons

• Takes a long time to pay off
• Stringent program rules
• Low graduation rate
• Obtaining a mortgage on the program is almost impossible
• Payments are not very low
• The creditors will kick you off the program if one payment is late or missed.

Bankruptcy:

Pros

• A full discharge of debts owed if you qualify for a Chapter 7
• The collectors cannot call and harass.

Cons

• Long term negative effect on credit rating
• Lifelong public record
• Hard to qualify for a Chapter 7
• If forced into Chapter 13 court dictates how much you must pay for how long
• Debt has no say.

Credit Card Debt Settlement:

Pros

• Great savings on debt amount owed
• Fastest way to get out of debt
• Private issue and is never made public.

Cons

• Short term negative effect on credit rating
• Collection calls
• Small chance of being sued by creditors.

Of all the debt relief routes above the most popular nowadays has become debt settlement & Merchant Cash Advances. However what really determines which method is proper for you really depends on the current monetary predicament that you are in. For Americans stuck deep in debt but have income to pay a portion of it off then debt settlement would be the correct choice, to help avoid Chapter 13 bankruptcy. Those who have lesser debt amounts and have no issue making the monthly minimums plus more, than credit counseling is better. Then of course for some, especially those who don’t own a business, the only course of action is bankruptcy.

A Merchant Cash Advance is an extremely good option for arranging for additional funds for your small business. You may need funding for occasional stock purchases, renovations in the office and other, similar short or long-term funding needs. A Merchant Cash Advance functions in a way that is very similar to that of a small business loan in the manner that it provides your business with financing when you need it. You can apply through companies like Rapid Merchant Funding and receive an approval (90% approval rate) in as little as 24 hours and typically receive funds (up to $250,000) in your account with in 48 hours of the completed application process.

It may be difficult to attain a Merchant Cash Advance if your business is in its beginning stages. It is much easier to get a personal line of credit. Therefore, it is often a good idea to use a personal line of credit in the initial phase of your business while you get the business rolling. You can then get into a position where you can apply for a Merchant Cash Advance and successfully obtain one. Your business assets, such as machinery or equipment, will never have to be used as collateral in order to secure a Merchant Cash Advance.

The advantage that a Merchant Cash Advance has over a small business loan is that it doesn’t require a fixed monthly payment. Payments are automatically deducted from each credit card (receivable) transaction your business does. This allows for flexibility in paying off the advance. If your business has a slow earnings period then there is no worry about making a fixed monthly payment. The flip side to that coin is if your business has a high volume sales period (i.e. Christmas Holiday Season) then the advance will be paid down that much quicker. In short, payments on the advance are directly related to your credit card sales and NOT a monthly expense to worry over because everything is automatically deducted from each credit card sale.

Different credit companies/banks offer different rates of interest on business credit lines/small business loans; some are lower, some higher. Therefore, you should do research on available interest rates to find out the rates at quite a few companies – you should then compare and contrast them to a MCA. You may ask the company to eliminate a few fees or requirements as your company grows in stature and debt repaying capacity but there is no guarantee they will comply with your request. There are a lot of hidden costs such as the application fee, loan fee, etc. With a Merchant Cash Advance from a company like Rapid Merchant Funding there are no hidden fees. Actually, there are no fees at all…

• No Application or Closing Fees
• No Interest Rates
• No Fixed Payments
• No Late Penalties

Further Advantages to a Rapid Merchant Funding Cash Advance…

• No Personal Guarantees or Collateral Required
• No cumbersome and costly paperwork
• No changing of bank processors needed
• Money can be used for ANY purpose (i.e.-back taxes; improvements; vacation; emergencies)
• An ongoing source of capital which is renewable as the advance is paid down or paid in full.

Just like a credit card, a Merchant Cash Advance is said to be revolving in nature. With the help of such revolving MCA you can have the finance you need for unforeseen business emergencies and expenses. A Merchant Cash Advance is an extremely useful tool for expanding your business and securing the financial survival and success of your business. Did I mention that it will not show up on your credit report?

Many people have been asking if the merchant cash advance industry has been affected by the recent subprime mortgage bust. We have found both a positive and negative scenario within the merchant cash advance industry.

The negative thus far has been much poorer quality applicants for a merchant cash advance (mca) that we are unable to provide funding for (e.g., many people whose houses are being foreclosed on).

The positive effect has been that we are also seeing some better quality applicants who in the past might have used traditional financing such as tapping into the equity in their home to help fund their business or a straight business loan from a bank. With the recent credit crunch and the decrease in real estate value in many areas of the country, many business owners are no longer able to use their home equity as a source of working capital for their business. It will be interesting to see if the positive is outweighing the negative for merchant funding.

As a previous mortgage broker I know that many of my clients are Self-Employed Borrowers. Many of these clients’ businesses are based on seasons and therefore have up’s and down’s of their cash-flow. This is why I am so excited about a new product that one of my Investors/Lenders is now offering.

Business Cash Advance

You might be asking what is a Business Cash Advance. BCA (Business Cash Advance) or sometimes called Merchant Credit Advance, is an advance of real Dollars $$ to a Merchant based upon the average Credit Card use (Visa/Mastercard only) Features include:

• NO Personal Guarantees
• Quick Funding (Usally between 3-7 Business Days)
• Minimal Requirements

So now that I have your attention, you might be asking yourself how does this program work? The Business or Merchant is advanced a percentage of their average monthly credit card use (6 month average) typically 150%. Then a small portion is taken out of every future sale over the next however many months until paid, there’s no set term. If you have a slow month your payments will reflect that; perfect for a Seasonal Business.

<Business that are Eligible

The Fun Part:

Requirements

• Minimum of 6 months that the Business has been accepting Credit Cards (Visa/Mastercard)
• $2,500+ a Month in Credit Card Sales
• All Bankruptcies have been discharged over 12 months
• Minimum of 1 year remaining on current Lease
• Personal Credit is Looked at as a guide only (FICO is not a determining factor)

We are great believers of supporting the small business owners and giving them the opportunity to fulfill their dreams and goals of a successful business. Sometimes you need a little help right away for that one time advantage that could change the course of your business over the next few months or years.

That’s where Rapid Merchant Funding comes in. We offer easy terms and fast advances. Find out how quickly your immediate cash needs can be met.

Both of these methods are used for working capital financing but which one is better will be clear from following discussion.

• Qualification ease: Working Capital Loans are difficult to obtain because working capital financing bodies factor in the credit score of the borrower, available collateral and various other factors. However, most small businesses would easily qualify for a Business Cash Advance as all you need is certain amount of credit card processing per month.
• Processing Time: It’s a week or more for a Working Capital Loan to get approved as a lot of paper work is involved. While an application for a Business Cash Advance is processed much faster (pre-approval in 24-72 hrs) and the paper work is also not as cumbersome. In fact with companies like Rapid Merchant Funding processing is done online.
• Ease of Repayment: A Business Cash Advance is never tied to a fixed repayment schedule. The repayment is done from credit card sales receipts and the businesses generally do not feel the pinch. Working Capital Loans on the other hand would have a fixed repayment schedule and the borrower would need to repay the amount according to the schedule. If the borrower fails to repay the working capital loan, it might affect his credit score and he also stands the chance of losing his collateral.

Your bankers should be your first stop in applying for small business funding. You and they have a history of working together. Familiarity goes a long way in pre-clearance of doubts and insecurities. Also banks offer slightly better rates for commercial loans than others.

But banks are more circumspect, and adherer of rules and guidelines regarding the borrower.

There are many other types of business lenders. The main differentiating factor is the type of loans they offer: secured or unsecured loans.

Banks usually offer unsecured loans, while independent financial organizations favor secured loans more.

These independent financial organizations are prepared to take more risks on startups and smaller businesses than banks. Often they specialize in particular industries, types of loans, or business sizes.

Essentials of loan applications

It is the first and perhaps the most important part of borrowing process, especially small business funding. Applying for a commercial credit requires a lot of preparation. Following are some key documents you are required to prepare:

• Financial statements: balance sheet, profit and loss statement, and tax returns of the company
• Personal financial statements and tax returns for last three years
• Cash flow estimates on the monthly basis
• Comprehensive business plan
• Precise loan utilization detailing
• Profiles of decision making people i.e. top management

The thoroughness and accuracy of these documents are absolute musts for successful borrowing, so it pays to prepare them carefully. Have your financial documents reviewed by a qualified accountant before presenting them.

Business Cash Advance, a Good Alternative:

But is there any alternative to loans so far as the small business financing is concerned? Yes, there are many other companies that are offering business cash advance to small business owners.

Business cash advance is not a loan and the organization offering this cash advance gets their money from the credit card sales that the business does in a specific period, there by reducing the burden of paying back the advance and the terms and conditions to qualify for such cash advance are also relatively simple and can be a good alternative to bad credit small business loans as they come at very high interest rates.

There are quite a few organizations which provide such cash advances. Organizations like Rapid Merchant Funding usually provides cash advance for working capital needs. They more often than not, target specific industries.

I hope that I helped clear some doubts and given some useful information. If information is power, you are now empowered to succeed in your endeavor to secure loan, there by realize your dreams.

For many, the term ‘small business funding‘ and ‘small business loan’ may not make much difference until they are aware of the pains involved in getting a business loan approved, however small it may be, and comparatively the rather painless process of acquiring small business funding.

The common feature in them is that they both are sourced to sustain, expand or remodel your business. But they are widely different when it comes to the process and cost involved in obtaining funds through each one of them and repaying the same.

Let’s compare the process first

Process Initiation

Small Business Loan: The process starts with contacting a bank or loan agent and filling a loan application form.

Small Business Funding: You already have a merchant account and are accepting payments through credit card. All you have to do is just fill in your details in a form and submit it, even online, to companies that offer cash advance.

Approval Process

Small Business Loan: The bank will pull out your credit rating, look into your credit history and check whether you have the capability to pay back the loan. In case you have bad, poor or even average credit rating, the chance of approval for your loan application is quite low. Even if approved, the rate may be considerably higher.

Small Business Funding: There are no credit checks here. You can get approval even if you have poor credit rating as this type of funding has nothing to do with your credit score.

Approval Time

Small Business Loan: Along with poor chances of approval (in case of bad credit history) the loan approval time due to involved intricacies and formalities is much longer.

Small Business Funding: The time taken for such funding to be approved and the cash transferred to your bank account varies from 48 hours to one week. That means you don’t have to wait much to be sure that you have enough funds to back your business plans.

Now let’s compare the cost involved in the process

Closing costs and processing fees

Small Business Loan: The closing cost and processing can vary from lender to lender and the amount of loan. But one thing is sure no loan can be free of closing cost and processing fee and you have to bear the burden.

Small Business Funding: There is no closing cost and no processing fee involved. That means you repay only what you get.

Repayment Method and Time

Small Business Loan: Your lender will fix time for you and you have to strictly adhere to repayment schedules or else you will be charged with penalty. Every delay in repayment of your monthly installment can cost you late fine and other charges.

Small Business Funding: You are not tied with any strict repayment schedule. A mutually agreed upon percentage from your credit card sales automatically goes towards repayment of your loan. This makes repayment much easier.

Now let’s see why small business funding is not a loan?

This funding is allotted to you against your future credit card sales. That means the merchant bank anticipates that you will have good sales in future buys your future credit card receipts. Hence the bank buys your future credit card sales and agrees to provide you with the working capital you immediately required.

So what are you waiting for? If you are in business for at least 6 months and have good volume of sales (minimum of $5,00) through Visa/MC credit cards, you can apply for small business funding immediately and get the much needed working capital within a few hours in your bank account.

No, EIRF is not a cousin of the once popular Smurfs. In fact EIRF is not any where close to being a nice, soft, smiling, blue cartoon character. On the contrary, EIRF is disagreeable, hard, frowning and black! If you have it you most certainly are wondering what it is, how you got it and how you can get rid of it.

EIRF is an acronym for Electronic Interchange Reimbursement Fee. On first glance the name looks like if you have EIRF you should be expecting to be reimbursed for some fee you already paid - WRONG!

EIRF is a surcharge category for Visa Interchange resulting in a much higher rate for certain merchant account transactions. Visa mandates that any transaction that falls into the EIRF category will incur a surcharge of .76% for retail accounts and .45% for Card Not Present or E-Commerce accounts.

How does a transaction fall into the EIRF category?

Retail Account (Mostly card swiped environments)
There are three main ways for a transaction to fall into EIRF on a retail account:

1. Transaction not batching with in 24 hours (Is your terminal set up to auto batch?)
2. Authorization and settlement amount not matching (Debit cards only)
3. Key entering a transaction with the incorrect billing address zip code.

Any of the above scenarios will result in a minimum of a .76% increase in your rate.

MOTO or E-Commerce Account (Mostly card not present environments)
There are four main ways for a transaction to fall into EIRF on a these type of accounts:

1. Invoice or order number not entered (skipped terminal prompt)
2. Not entering the billing address street number and zip code (do not need to match)
3. Authorization and settlement amount not matching
4. Transaction not batching with in 24 hours

Any of the above scenarios will result in a minimum of .45% increase in your rate.

What if your rates are higher than these?

The surcharges listed above are the actual rates from Visa. If the rate you are paying for EIRF is higher that the ones noted above, your surcharges are being padded for profit by your merchant account provider. If this is the case with your merchant account chances are your surcharges for other transactions categories are being padded as well.

Would you like to lower your merchant account costs by removing all the padding on your surcharges? If so check out how much a Rapid Merchant Funding merchant account can save you.

Pricing Difference Between a Retail and a MOTO Account

Both Visa and MasterCard see a Card Not Present (CNP) transaction as a greater fraud risk than when a card is present and swiped. Therefore, both have a .31% surcharge on CNP transactions. So let’s say you have a base discount rate of 1.85% on a retail account. If you switch your account to MOTO your base discount rate would be 2.11% (1.85% + .31%).

So what happens when you have switched to MOTO and a client comes into to your office and swipes their card? If your account is set up correctly that transaction should come in .31% lower than your base discount rate. In other words with a MOTO account you are still getting the lower rate on the swiped transactions and reducing your risk of non-qualified transactions or EIRF.

The only negative is your base discount rate may sound high because of the .31% surcharge. But if you understand how a MOTO account works you can see that higher rate is really not an issue at all.

If you have more than 30% CNP transactions make sure your merchant account is set up MOTO.

Let’s start off with what Retail and MOTO means:

MOTO = Mail Order Telephone Order, credit card not present.

Retail = Store where card is present and swiped.

As you many be able to tell by the above definitions, the key issue that defines what the account should be is whether or not your customers credit card is present or not during a typical transaction. If the credit card is commonly present and swiped the account should be retail and if the card is typically not present it should be MOTO.

Does It Really Matter How I Set Up My Merchant Account?

It actually does! Most merchant accounts are set up retail because these accounts have the lowest rates and therefore are the easiest to sell. However, if you are set up retail and the majority of your transactions are card not present this could cost you dearly. Here’s why - if you are set up retail and you have a card not present transaction and you enter the incorrect zip code on a Visa transaction it will go to EIRF! That means a minimum fee increase of .76% (typically more like 1.25%)!

Sometimes I see a true MOTO merchant having 25% of their transactions going to EIRF because of this single issue. Therefore, if you are a business with mostly card not present transactions and you see either a bunch of “Visa non-qualification” or EIRF on your statement, switch to a MOTO account quick!

If you are set up MOTO you will be required to enter the zip code and the street number but these are not required to match. Therefore, your non-qualification/EIRF issue will go away immediately.

There are some differences in the pricing of these two account types and I will explain that in part 3 of this post.

I just finished reading a press release from a competing company. In the release the president of the company wrote,

“Everyone is trying to come up with a better system. There isn’t one. It is just about rates…the only thing that gets the merchant’s attention is, ‘How cheap is the rate?’”

From my experience this president is expressing an industry wide view. The result is merchant account sales people low balling base discount rates and hammering merchants on their surcharges. Is anyone reading this paying 3.5% for “non-qualified” transactions? Then you know what I am talking about.

Here is a typical example:
A business goes shopping for a merchant account and their goal is to receive the lowest rate. This business does 20% of its transactions face to face and 80% by phone. When they call around they receive a quote of 1.59% and they go with that offer believing they received the best offer on the market place.

Here are the problems with this example:

1. The rate of 1.59% is great for a generic consumer card that is swiped in the store but on every other type of transaction the rates are hyper inflated. Since 80% of there transactions happen over the phone they pay 2.40% for all those transactions and there effective rate comes in at 2.70%! Not what they expected.
2. In order to provide such a low rate the merchant account provider set the account up as a retail account. The result is whenever a customer calls in to make a purchase with a Visa card and provides an incorrect zip code the rate jumps up to 3.20%. If the merchant account provider had focused on more than price they would have set up the account MOTO and the zip code problem would not be an issue.

My point here is that when searching for a merchant account provider, price is not the only item you need to pay attention to. Other issues to consider are:

• Surcharges (on rewards, business, corporate, signature preferred, etc cards)
• Transaction Fee (price, attempt vs. capture)
• Account type (retail, MOTO, E-commerce, restaurant, hotel, auto rental, etc.)
• Account pricing model (gross or interchange plus)
• Transaction qualification
• Customer service

Questions for You
Now for the questions - is your merchant account set up correctly? Are you really paying the lowest amount possible for your account? If you have any doubts, contact me and let’s do a review. You may be surprised by the results properly setting up a merchant account can provide.