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Updated on Thursday, April 18, 2019
Business Finance Advance provides merchant cash advances to entrepreneurs seeking alternatives to business financing from a traditional bank. The Brooklyn, N.Y.-based company allows business owners to leverage assets such as credit card transactions in order to receive funding.
Business owners can use merchant cash advances from Business Finance Advance to pay for equipment, make existing debt payments or increase their working capital. Merchant cash advances are different than other business financing options like small business loans and lines of credit. When you obtain a merchant cash advance, the advance provider purchases a portion of your receivables, like credit card sales, in exchange for a lump sum of cash.
The company would then take a percentage of your daily sales until you pay back the advance. Because the repayment schedule is based on a percentage, the cash advance company would receive a larger payment on days when your sales are high.
You might be more likely to consider a merchant cash advance if you have poor credit or need money immediately, as merchant cash advance companies typically have lenient eligibility requirements and fast time to funding. However, merchant cash advances are often costly, and the daily repayments could disrupt your business’ cash flow. Some cash advance companies are also deceptive in their advertising and don’t disclose prices up front.
If you’re considering a merchant cash advance as a funding solution for your business, we’ll walk you through Business Finance Advance’s offerings. You may want to also check out our parent company LendingTree, to shop around and compare small business lender offers.
Business Finance Advance funding details
Business Finance Advance offers cash advances to small and mid-size businesses. Business Finance Advance issues advances between $2,000 and $1,000,000, but the exact amount you qualify for would depend on your business’ average monthly credit card sales.
Instead of charging interest, Business Finance Advance sets a fee for your cash advance. The company determines how much to take from your credit card sales to repay the advance plus the fee. There are no penalties if you choose to pay off your debt early.
Your fee would be based on your type of business, how many years you’ve been in business, your overall sales volume and your personal credit score. Because the company advances you cash in exchange for a percentage of your daily credit card sales, you would not be required to supply collateral or sign a personal guarantee.
Business Finance Advance also advertises advances specifically for equipment purchases. The company provides financing options for auto service equipment, computer equipment, dental and health care machinery and equipment, among others.
What businesses are eligible for Business Finance Advance funding?
Business Finance Advance doesn’t require much of applicants. The main criteria for businesses is the ability to accept credit card payments. You’ll need to demonstrate that your business accepts at least $4,000 in monthly credit card sales.
Because repayment is based on credit card sales, businesses with a high volume of credit card transactions would be best suited for funding from Business Finance Advance. The amount of cash you could receive would also depend on your volume of card sales.
Business Finance Advance’s eligibility requirements are not as strict as most other small business lenders. Businesses owners who have less-than-perfect credit and cannot secure traditional small business financing could find financial solace in Business Finance Advance.
The pros and cons of Business Finance Advance
- Few eligibility requirements.
- Fast approval decisions.
- No personal guarantee or collateral required.
- Maximum funding amount dependent on your credit card sales.
- Cost could be high.
- Repayment process could disrupt cash flow.
Application process and requirements
You can apply for a cash advance from the Business Finance Advance website, via fax or email or over the phone.
To be eligible for a cash advance, you need at least six months to one year in business and $10,000 in monthly revenue or $120,000 in annual revenue.
A Business Finance Advance agent should contact you within 48 hours after you submit your application and present several funding amounts you could choose. Business Finance Advance usually approves an amount that’s one to two times your average monthly credit card sales. It could take up to seven days for you to receive funding once you’re approved.
The fine print
Set aside time to configure your credit card terminal. After signing your financing agreement, Business Finance Advance would need to configure your credit card terminal to be able to deduct a percentage of each sale. This could take 10 to 15 minutes. Business Finance Advance recommends setting up your credit card processor in the morning before you open for business or in the evening after you’ve closed.
Avoid falling into a debt spiral. Business cash advances are popular because they provide upfront cash without putting up collateral like your home, allowing business owners to repay as they make sales. But as sales fluctuate, your ability to repay does, too, possibly stretching out or reducing the speed at which you planned to repay the debt. This is what causes merchant cash advances to become so expensive and why business owners sometimes take out additional advances to cover the cost of the first one. This is known as “stacking” cash advances and can lead to a downward debt spiral. Make sure you can afford the price of a cash advance, or you may find yourself in over your head with debt.
The bottom line
Business Finance Advance offers quick funding solutions to nearly any small business owner in need. If you can’t qualify for a loan or line of credit from a business lender with strict requirements, you may be eligible for a merchant cash advance from Business Finance Advance.
However, the company does not list its full roster of fees online — it says rates may be as low as 12.99% — so you wouldn’t know the cost of the advance until you apply. You may need to call the company to gather details before making a decision about whether Business Finance Advance is right for your business.
Merchant cash advances are known to be highly expensive financing products, and they only provide a short-term solution because amounts are generally low. Before pursuing a merchant cash advance, you may want to shop around for other sources of funding. But if you feel comfortable with the cost and repayment terms, a merchant cash advance could be a quick way to fill a monetary gap in your business.