My sister is a small business owner of a video rental shop. On a monthly basis, over half of her customers pay with a credit card. The business itself has been in existence for the last ten years, so it has been well established. Until this past year, the business has realized profits every year, so in a lending perspective, it had relatively low risk. Because of the tough economy this past year, my sister went to the bank to investigate about a working capital business loan. This was the second time she had applied for a loan, and the first loan had been returned on time, so we did not think she would be declined. Four weeks later we heard back from the bank and were told that they felt her business was too risky, so they were not going to supply a loan. They said we were welcome to reapply in six months, but we needed the funds now so that was not an alternative.
We did not have a credit line available to us, so we needed to find a source of cash and this had to be done promptly. She had many bills that were coming due and any delayed payment would have been regrettable because the vendor would not send her stock. This would have angered many customers and hindered our business operations. After an deep search, we discovered credit card factoring. A.K.A. a merchant advance. This procedure gave us the funds we needed to fulfill our vendors. So how does it play out?
The first step was to be registered with the company to receive the cash advances. Credit card factoring does as its name implies and focuses on the business’ credit card lot. Most lending companies need at least five thousand dollars per month in credit card sales. Once you meet this requisite, it is relatively simple to find funds. We receive the monetary funds from the lender and repayment is made automatically whenever we resolve the credit card lot. For any small business seeking funds, this is a great way to find finances for your business.
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