Working capital loans for retail business is increasingly difficult to obtain. Although there is much talk of helping the "main street" in the media and politics, the reality is that the most cost-effective working capital for a business is SBA or Bank loans. Unfortunately, the constrained credit environment in which we find ourselves means that most of these loans are not approved for retail businesses that need it most.
This makes a lot of retailers in the unfortunate position to go with a merchant cash advance from their credit card processing company. Cash for working capital is often referred to as a "comfortable" and "not safe" way for business owners to get "fast money". You can get working capital loans from https://www.buc.org/working-capital/.
The fact of the matter is, most companies advance securing their loans through the filing of the UCC to the business. Although it may not be in the owner's personal credit, for many small retailers, have a UCC filing on their businesses are not much different. This is a lien placed on the business until the advance repaid.
What is often left out is that the cash advance companies are not regulated by the government as a loan. This means that they are free to charge interest rates, or the rate factor, of 50% or higher. Even on a short-term working capital loans, this is a surprising amount of interest.
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Progress is often characterized by high upfront cost, and the requirement to switch payment processors and / or buy new equipment from the provider. They may also have a high "hurdle" or level of daily payments that represent a real burden for many companies.
But now there is a new way for small retailers to get credit for working capital they need without having to go to the "lender of last resort" as a Merchant cash advance. This new method, known as credit card receivables financing, characterized by:
- Interest rates were 50-80% lower than the typical cash advance
- There is no requirement to switch processors- stay with the current provider.
- There is no requirement for the purchase of equipment
- Score a credit to the owners of 550
- Approvals in 48 hours – a low documentation