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Protected
Protected
Unsecured Funds
No Personal Guarantee &
No Collateral Required*
Quick Funding
Get Funded Within
a few days
Simple & Easy
Past credit issues may
NOT be a problem
Fast Approvals
Within 24 hours of
application
What is 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. This type of funding program is typically referred to as a Merchant Cash Advance.
Funding Amount
7.5K – $1M
Funding Term
3 months – 18 months
Rates
Starting at 1.09
Speed
1-2 Business days
Pros
- Get access to funds quickly
- Approval process is easy
- Less than perfect credit accepted
- Use for a variety of business purposes
Cons
- Higher rates & fees than with traditional loans
- May have to change merchant services provider
- Shorter repayment term may reduce cash flow
For some business owners, the traditional bank loan just won’t work. If you work in hospitality, retail, or a similar business, then you understand. These businesses go through cycles. They have slow periods followed by bursts of activity. You may have mastered the art of planning for these periods, but the bank doesn’t care. If you take out a small business loan, you’ll have to make your fixed, regular payments no matter how business is going. The entire point of a loan is to help your business grow. Your business loan shouldn’t make your life more stressful. However, you do know that you need some kind of loan, so what do you do?
If any of this sounds familiar, then a credit card factoring may be perfect for you. Just like a term business loan, a credit card factoring loan gives you a lump sum of money that you can use however you’d like to use it. However, instead of making fixed monthly payments, you pay back your loan by using a portion of your credit and debit card sales.
Compared to other loan types
| Loan types | Max Amounts | Rates | Speed |
|---|---|---|---|
| Merchant Cash Advance | $7.5k – $1m | Starting at 1.09 | 1-2 business days |
| SBA Loan | $50k-$10m | Starting at 5% | 3-5 weeks |
| Business Term Loan | $10k to $5m | Starting at 5% | 1-3 business days |
| Business Line of Credit | $10k to $250k | Starting at 8% | 1-3 business days |
| Receivables/Invoice Factoring | $50k-$10m | Starting at 5.8% | 1-2 weeks |
| Equipment Financing | Up to $5m per piece | Starting at 5% | 3-10 business days |
| Revenue Based Business Loans | $10K – $5m | Starting at 9% | 1-3 business days |
United Capital Source
Ready to start a partnership? Then talk to us about factoring your credit cards sales today. You can call us for your free consultation, or you can go ahead and start your application online now.
Who Qualifies
Who Qualifies for Credit Card Factoring?
To apply for any United Capital Source funding program, you’ll need to fill out a one-page application and at least 3 merchant/bank statements. For credit card factoring, you’ll also need to prove that you have steady credit and debit card sales.
How to Apply
How to Apply for Credit Card Factoring
Your credit card factoring application will look just like any other UCS application. If you take the following steps in order, you’ll have a smooth and easy process.
Consider Your Needs
First, think about how much funding you need and how you plan to use that funding. Understanding this step upfront will make your application process go much faster. If you have any questions about which type of business loan is right for you, your United Capital Source team would love to answer your questions.
Gather Your Documents
You’ll need some documents to apply for credit card factoring loans. If you gather these documents before you start your application process, that process will go much more smoothly. Here’s what you’ll need to get started.
- Driver’s license
- Voided business check
- Bank statements
- Credit card processing statements
- United Capital Source 1 Page Application
Submit Your Application
Once you submit your application, you could have your business funded within just a few days. Start your application online or give us a call if you have any questions. We’ll call you back to talk about your terms and options. Within 24 hours, you’ll know whether or not you’ve been approved.
How it Works
How Factoring Your Credit Card Sales Works?
As we mentioned, you can use your credit card factoring loan just like you would use a traditional business loan. You’ll also receive that funding as a lump sum. The difference, however, comes from how you pay back the financing. Instead of paying the same amount every month, the money you pay back will come from a portion of your credit and debit card sales. The money gets deducted automatically, so you won’t have to worry about it.
Cost
What Does Credit Card Factoring Cost?
As you know, a business term loan comes with interest. Credit card factoring, on the other hand, involves a factor rate and a retrieval rate. The factor rate works like regular interest. It’s the percentage on top of the principal balance that you’ll have to pay back. Your original funding amount multiplied by your factor rate = the amount that you’ll pay back. The retrieval rate is the percentage that goes back to the lender until you pay off the entire loan.
For example, let’s say that you factor $50,000 in credit card sales.
If you have a factor rate of 1.15%, then your ultimate cost is $115,000. That is, this is the amount that you will pay your lender once you’ve paid off your entire merchant cash advance.
$100,000 x 1.15 = $115,000.
Your retrieval rate is the percentage of your daily credit and debit card sales that your lender will receive until you’ve paid off the full amount. Let’s say, for example, that you make $1,000 in credit card sales on a given day. If your retrieval rate is 10%, then your lender will receive $100 that day.
$1,000 x 0.10 = $100.
Once you know your funding amount, your factor rate, and your retrieval rate, then you can easily calculate your costs.
People Also Ask
People Also Ask
You may have a lot of questions about credit card factoring. After all, it’s a relatively new type of business funding product. Check out the questions below and see if your questions are among them.
What are the Advantages of Credit Card Factoring?
First of all, credit card factoring payments are deducted automatically. As a result, you don’t have to worry about missing payments. Payments are made whenever you batch out your transactions. It’s virtually impossible to miss a payment with credit card factoring.
Second, your payments depend entirely on how much money you make, so you’ll never have to worry about a payment that you can’t afford. With a term loan, you have to make the same payment amount no matter your business circumstances. Let’s say that if you make $2,000 in credit card sales, then your lender makes $200. If some circumstance prevents you from making $2,000 the next day, then you don’t have to worry. If you make $500 in credit card sales, then your lender gets $50. Your payments will always correlate with sales in order to have the least effect possible to your cash flow.
What is the Difference Between Credit Card Factoring and a Working Capital Loan?
The term “working capital loan” is a broad term that covers several categories. A credit card factoring loan is just one of those categories. While all credit card factoring loans are working capital loans, not all working capital loans involve credit card factoring.
Most customers who were approved had
Annual Revenue
$120K+
Credit Score
550+
Time in Business
4 months+
What Documents Will I Need To
Apply For Credit Card Factoring?
- Driver’s License
- Voided Business Check
- Bank Statements
- Credit Card Processing Statements
- United Capital Source 1 Page Application
Factoring your credit card sales are a great financing solution for those business owners who need capital within a few days and can’t wait for months of red tape at local banks.
Danielle Rivelli
Credit Card Factoring