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Getting approved for a business loan can be rather complicated if you do not have a business that has been running for at least 3 years with an impeccable credit history and previous loans obtained and paid off in a timely manner. business cash advance is an attractive financial option in these situations. These are a unique type of business loans that are considered as the finest way to combat financial crisis and obtain instant cash during situations when finances are required urgently for ensuring smooth business operations. In fact, business cash advance is the most popular and preferred financial resource in a small business funding sector. Using these, one can maintain a healthy cash flow and also meet the necessary cash availability for the day-to-day business activities.

What makes these cash advances so attractive? In order to find answer to this question, one should look at the various advantages that are offered by these loan types.

1. The most significant advantage of cash advance is that loan approval is not dependent on the credit history of the business owner or the firm. Lenders don’t ask for a credit check nor do they require any verification of credit records in case of cash advances
2. Extensive documentation such as submission of business plan, financial statements and audited tax records are not required in order to get approved for a cash advance.
3. Loan application, processing and approval process is easy, safe and convenient. One can get approved for the loan within a day or two. Cash is received within 7-10 days.
4. Another significant benefit is that businessmen are not personally liable to repay a business cash advance. In fact, these cash advances are flexible and don’t have a fixed repayment schedule. Business cash advance programs get repaid through future sales that take place through credit card terminals. Repayment is entirely dependant on the volume of sales made using credit cards. Whenever any payment is made by the customer using a credit card, a certain percentage of the payment amount is automatically deducted towards cash advance repayment. The business owner receives the remaining amount. If the payment is made through any other mode including cash, check or using other cards, the entire amount remains untouched.
5. In order to get approved for a cash advance, businesses don’t need to provide any collateral or a personal guarantor. The owner of the firm can simply sell a certain percentage of his/her future credit card receivables to any of the cash advance companies and obtain cash.

Inspite of these many advantages, several business owners are still apprehensive about opting for a cash advance. This is because these loan types have certain disadvantages. Some of these are listed below.

1. Cash advances are mainly unsecured loans. Lenders consider them under high-risk category and tend to charge exceptionally higher interest rates so as to compensate the risk. Hence, cash advances usually have a higher annual percentage ratio.
2. Loan amounts provided under these are very small and are usually restricted to only a few thousand dollars.
3. Another major disadvantage of cash advances is that these contain high application fees, certain hidden costs and high closing costs. Even the processing charges on these loans tend to be higher.
4. Cash advances are considered risky because all the business financial statements are open to the business cash advance provider, thereby increasing the chances of losing important personal and professional information to any third party.

 

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This entry was posted on Monday, December 15th, 2008 at 10:53 am and is filed under Businesses product. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.