Guidelines To Follow For Merchant Cash Advance Companies
With the economy teetering on the ropes after the sub prime residential financing crisis, small business owners are finding it harder than ever before to get approved for a normal bank loan. A merchant cash advance may be a great solution. A fast approval time, reasonable cash advance amounts of up to $250,000, and a flexible repayment plan are all motives for going after this different direction for the funds your business needs.
Still, a entrepreneur would do well to look at more than just the working capital they can acquire. The North American Merchant Advance Association (NAMAA) has a list of best working practices that they endorse for merchant cash advance providers. If the company quoting you a business cash advance doesn’t adhere to these practices, it is probably best to look elsewhere. The practices are as follows:
-Demonstrate transparent disclosure of costs – NAMAA doesn’t endorse closing costs as part of the application process of merchant advances but recommends that any such costs be clearly explained and disclosed. The total repayment amount should be totally explained and figured out before putting the final touches on the contract.
-Demonstrate clear disclosure of liability – In reality, merchant advances aren’t regarded as loans; rather they are looked at as a purchase of future credit and debit card sales. As such, the entrepreneur can be held personally in debt for any monies not repaid if the merchant opts to violate the agreement.
-Be mindful of a small business owner’s business cash flow – A typical contract involves that the merchant repays a determined amount of credit and debit card receipts on a day to day basis.
-Advertising materials disclosure – All marketing materials should make it clear that the arrangement is one of factoring, not a loan.
-Keep tabs on your Sales Agents/Brokers – Merchant advance lenders should ensure that their sales agents or brokers are properly representing the terms.
-Proper repayment of outstanding Merchant Cash Advance Balances – if a merchant opts to take an additional merchant advance with a new provider the new lender should immediately cover the previous balance instead of leaving it to the small business owner to cover the remainder.
Dating back to early 2008 Daniel Samoohi has helped 1000’s of business owners find reputable providers in order to review offers for a merchant cash advance. By making lenders compete with each other, Daniel also helps businesses find great deals for credit card factoring.
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