What Are Credit Card Processing Loans?
A business loan against future credit card sales is sometimes referred to as a “Merchant Cash Advance” or “Credit Card Processing Loans”. You would receive a lump sum based on the revenue you are projected to generate from debit and/or credit card sales throughout a given period. Payments would be automatically deducted from debit and credit card sales when you batch out. So, if you have a slow month, your payments would be small. The beauty of credit card processing loans is that small payments have a smaller effect on cash flow. They don’t have to be followed by larger payments, nor do they increase the total amount you have to pay back.
Instead of interest, fees for credit card processing loans come from your “factor rate” and “retrieval rate,” both of which are fixed percentages.
The factor rate determines your total amount, while the retrieval rate determines how much will be deducted from your daily sales for payments. You can make payments on a variety of frequencies, though most borrowers batch out their transactions daily and therefore make their payments on a daily basis.
What Do I Need A Credit Card Processing Loan For?
Credit card processing loans can be used for a wide variety of purposes. You can quickly recover from emergencies, handle business expenses during slow periods, consolidate existing debts, or invest in long-term initiatives that might not increase revenue for several months.
For some industries, the most lucrative opportunities arise out of nowhere. You might receive a bid on a massive new project or hear about a one-time discount on popular inventory. But since you had no idea these opportunities would present themselves, you didn’t set aside any extra cash. Even if you could afford it, your increased revenue won’t come in for another few months, and you need to pay your employees in just over a week.
Business loans against credit card sales allow you to take on large expenses without having to worry about paying your bills at the end of the month. Companies save money when they capitalize on opportunities or fix unforeseen problems as quickly as possible. With a business loan on credit card sales, you can still act quickly during a slow period because you wouldn’t have to pay off the majority of the debt until sales volume increases.
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Since payments for credit card processing loans are directly tied to credit/debit card revenue, you can use your funding for just about anything as long as you are projected to increase or at least stabilize revenue in the approximate future. Apply now to see how much you qualify for!