The Cash Advance Process by ScoreSMB


									The Cash Advance Process
By Resource Nation

Applying for a business cash advance is a fairly simple and straightforward process. Here’s a
quick step-by-step guide to the cash advance process:

1. Collect financial information.
Collect information about credit references, sales history and other relevant documents before
you apply. Similar to a business factoring application, a cash advance application generally
asks for specific information about credit card sales amounts, current financial information and
business operation costs.

2. Apply.
Most cash advance providers offer online applications that can be completed in as little as an
hour. Providers are generally more interested in your ability to operate your business reliably
and pay back the loan than in your credit history, so often there is no credit check–just a
request for recent credit card sales information and current business credit references.
Providers will ask for information to help them determine repayment terms and advance

3. If you’re approved…
After you fill out the application, the provider will contact you with an approval or a request for
more information. Though approval can take as little as a few hours, the process typically
takes up to a week. Your advance amount will be based on your current sales volume,
operating costs and credit or debt obligations.

4. Agree on terms and conditions.
Once you’re approved, the provider will draft a contract that specifies the terms of your
agreement, such as the “safe retrieval rate,” or the percentage of daily credit card sales that
can be set aside and used for repayment of the advance. The provider uses this amount to
determine the daily retrieval rate. The daily retrieval rate cannot be higher than the “safe”
rate–the higher the amount set aside each day, the faster you’ll be able to repay the advance.

Any prospective agreement should address pre-payment–if you want to pay the advance off
early–and default options. Typically, providers reserve the right to collect the full outstanding
balance if payments are not made according to the agreement. Providers often place liens on
business property, and in some cases, even force sale of business assets to collect unpaid
amounts. Make sure you’re aware of all responsibilities before the advance agreement is

5. Ensure merchant account compatibility.
Once terms are agreed upon, the provider will send you a contract and arrange to transfer the
advance amount to your business. You will need to make sure the provider will have access to
your merchant account in order to collect repayment. Some credit card processing companies
charge additional fees for third party access or do not allow third party transfers at all. If this
is the case, you may need to switch to another merchant account provider. Make sure you
consider any cost associated with switching providers in order to take the advance.

Resource Nation is your source for small business success providing how-to purchasing guides
from business cash advance to factoring. Resource Nation also helps businesses select and
choose vendors in over 100 categories.

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