Though it can be compared to Factoring, Credit Card Receipt Advances can be obtained without having the best credit scores.
Having consistent charges on a monthly basis demonstrates a solid Cash Flow which can mimic an annuity. This provides certain finance companies the confidence to advance you on the future cash flow you would receive. The payments are usually taken out as a percentage of each charge that is made. So if your normal Processing Fee for taking charge cards was 3%, the Finance Company may charge a total of 8% of each charge, 3% for the transaction fee plus 5% as payment toward the Principle and Interest incurred on your loan. There is a great convenience in this type of financing in the fact that you are not writing a check every month. But as with every convenience, there is also a cost. The effective interest cost of this loan will usually range from 18% to 36% annually.
Qualifying requirements for this type of financing would be:
- Your business must have a history of accepting credit cards as a form of payment
- You need to be processing a minimum of $1,500 dollars a month
- No Judgments, Tax Liens or other type of “open” Public Record on your credit file.
How does the program work?
- You are advanced up to $100,000 based on your current charge receipts
- There is not a fixed payment payments, but aware of account minimums.
It is important to verify your lenders references, how they treat their current customers will be a good indication of how they will treat you.