You want a small business loan but the terms and requirements are making you think otherwise. The likelihood of approval for a standard business term loan is slim to none thanks to your poor credit history and lack of collateral. Even if approval was a realistic possibility, you can’t afford to make fixed, monthly payments immediately after funding is distributed.
The very nature of your industry produces erratic cash flow that is nearly impossible to predict. As far as you know, small business loans are out of the question for smaller businesses prone to occasional dips in revenue with minimal cash on-hand.
Besides, you need cash right away. Not next week.
But there’s one thing you do have: Consistent debit and/or credit card sales. No matter what shape your cash flow is in, the overwhelming majority of your sales are always conducted via debit and credit cards. This is the primary and only rigid requirement for Credit Card Factoring a business loan against future credit card receivables. If you can prove that your business is projected to increase or maintain its usual volume of debit and credit card sales, your eligibility for credit card factoring is a near certainty.
Some of the clients we’ve helped obtain credit card factoring include hotels, motels and other types of lodging, restaurants, franchises and retail stores. Contact us today for your free business funding consultation!
Credit Card Factoring
Though credit card factoring is not technically classified as a “loan” or “debt”, funding comes in the form of a lump sum. The amount you’re approved for is based on the revenue you draw from credit and debit card transactions.
But instead of making fixed payments at the same frequency, the amount is paid back via a fixed percentage of future debit and credit card sales. Payments are only deducted when you make credit card sales, so you don’t have to worry about making substantial payments during a slow month. In fact, you don’t technically have to worry about remembering to make payments at all, since deductions are made automatically through your credit card processor after each sale. Most business owners batch out their transactions daily, and therefore make payments at the end of each day.
Fees for credit card factoring stem from two percentages: The “factor rate” and a “retrieval rate.” The factor rate is similar to interest on a traditional business loan, since it increases the amount you owe. The retrieval rate helps you figure out how much money from your daily sales you’d be paying the business lender until the total amount is paid back in full.
A major advantage of credit card factoring is versatility. You can use credit card factoring for both short-term and long-term investments, or simply to cover business expenses during a rough patch. Some borrowers use credit card factoring to consolidate and pay off the existing debts that gave them bad credit in the first place.
Either way, your main objective should be to increase or stabilize revenue because payments for credit card factoring are directly tied to sales.
Common investments that are ideal for credit card factoring include bulk inventory orders, marketing campaigns, increases in staff or new equipment. You could also use credit card factoring to capitalize on a sudden, expensive opportunity that would otherwise make it difficult to pay monthly expenses on time.
The payment system of credit card factoring makes it one of the few business funding programs capable of financing long-term initiatives amid fluctuations in cash flow. You could even argue that factoring your credit card sales transforms a slow period from a weakness into a strength.
Now that you don’t have to scramble for cash to pay your bills, you can use this time to ensure a strong performance in the months to follow or tackle crucial tasks that have been on your back burner. Apply now to see how much you qualify for!
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