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Everything You've Ever Wanted to Know About the Credit Card Advance

Aug 30, 2008
The Credit Card Advance: You hear about it all the time, you've seen advertisements for it online, and you may have even thought about getting one. But do you really know what it is? You think, "Well, I know what a credit card is, and I know what advance means," but when you combine the two definitions in attempt to decipher the hidden message, you're still just as bewildered as you were from the start, if not more.

Any enterprising, yet cautious business owner in dire need of business funding, will undoubtedly have many questions about credit card advances before setting out to attain one; How does it work? Who is eligible to receive one? What is the repayment like? In reality, the mechanism of a credit card advance is quite simple, and by the end of this article you will know whether a credit card advance is a right fit for your business.

Definition

A credit card advance is one of the many available means of business financing. It is a loan, a sum of money (that must be repaid), provided by a lender to a merchant for business funding. Traditionally, business owners look to banks for bank loans when attempting to gain additional funds. But there are many factors that make a credit card advance very different than a bank business loan.

Eligibility

One does not need excellent credit to be eligible to receive a credit card advance. Likewise, proposals, collateral, and personal finance statements are unnecessary when applying for a credit card advance, making credit card advances easier to receive than bank loans, especially in today's economy.

Credit card advances are only practical methods of business financing for merchants, or business owners who process credit card sales on a regular basis. With most credit card advance companies, a business owner must complete a short application, and submit specific documents. Most lenders will require the applicant to be a business owner for at least six months and submit documentation of the last four months of his/her business' credit card transactions. These monthly transactions must meet a minimum of anywhere from $2,500 to $5,000. After the submission of all required documents, it should only take a few days for a credit card advance to be approved. And after approval, many lenders can have funds in a business owner's account in about one week.

Repayment

Once a credit card advance has been funded, the repayment process begins. Cash advance lenders do not require fixed monthly payments. The payback system is one that works with the merchant and his/her credit card sales. Rather than requiring a payment every month, and imposing interest rates, the credit card advance repayment is deducted as a small percentage from the business' daily credit card sales. This is where the term credit card advance comes about. The money received is given in advance, in return for a small percentage of a business' credit card sales. This leaves the borrower free to go about his/her business as usual and rest assured that the credit card advance payments are being taken care of. This also works as an advantage to business owners because the repayment amounts adjust themselves according to the business' sales amount for a particular day. In other words, payments are only made when the business makes money.

Quantity

Lenders determine how much money they can lend based on a business' monthly credit card sales. Typically, any amount between $5,000 and $600,000 can be funded, but a business that does not bring in a large volume of monthly credit card sales will not be able to receive a $600,000 credit card advance, because it would require either an unacceptable amount of the business' daily credit card sales to be deducted, or an extensive amount of time for the credit card advance to be repaid, neither of which is beneficial for the borrower nor the lender. For a more realistic idea of the amount of money that you can receive, multiply your average monthly credit card sales by 120 to 130 percent.
About the Author
David Castro often writes articles about Credit Card Advance and Small Business Loans for Merchant Resources International - To Learn more Visit Us at http://www.cashprior.com.
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