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Using a Merchant Cash Avance for a Corporation

Sep 10, 2008
According to Wikipedia, generally, a corporation is given many of the same legal rights of an actual person, but unlike general partnerships and sole proprietorships, a corporation has legal independence from the person or people who created it. In other words, a corporation and its owner(s) are viewed as separate legal entities.

Usually, business owners who form a corporation are concerned about their personal property, money, etc., and do so in order to protect themselves and their personal assets. Since the business has a separate legal identity than its owner(s), shareholders are granted limited liability, meaning, if the business fails, they will not be personally responsible for any debts that the business owes to creditors. Still, sometimes, directors of corporations may be required to co-sign for a business loan, and although shareholders and employees will not be responsible in the case of default on the loan, the director(s) who co-signed will be required to use their own money to repay the loan.

The structure of a merchant cash advance makes it very compatible with owners/directors of corporations, who are obviously very protective of their personal property. Merchant cash advances are designed to make businesses responsible for repayment rather than business owners. This is done by using a small percentage of customers' daily credit card purchases as repayment for the merchant cash advance.

Usually, any merchant business that has processed a minimum of $2,500 in monthly credit card sales for at least four months, and has at least one year remaining on the business' lease is eligible to receive a merchant cash advance.

Once the merchant cash advance has been approved and funded, the automatic payback process begins, leaving repayment to be handled without the owner having to make payments every month. This small percentage is deducted from the corporation's credit card sales until the entire merchant cash advance has been repaid. A process that is so user-friendly, that business owners may not even realize that their merchant cash advance is being repaid as they carry on with business as usual. Receiving a merchant cash advance will also have no affect on the borrower's credit score, keeping with the owner's desire to keep his/her own self and his/her business separate.

A merchant cash advance can be a great investment for a corporation. The money received can be used for business financing, working capital, or paying off debts. Receiving a merchant cash advance can benefit both the corporation, and its director(s).
About the Author
David Castro often writes articles about Merchant Cash Advance for Merchant Resources International - To Learn more Visit Us at http://www.mymerchantcashadvance.ca/
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