Business Cash Advances and Credit Card Processing Basics

A thorough review of basic working capital financing practices should be helpful to most commercial borrowers because many businesses have experienced increased difficulty with both decreased sales and the lack of adequate bank financing. For even the most successful small business, the possibility of reducing a significant business expense is likely to be appealing. If small business owners can increase their cash flow with a merchant cash advance while cutting credit card processing costs, it will usually be a good idea to get back to basics when considering their overall commercial finance options.

While they will not be discussed here, there are other working capital financing options to consider for a business which does not accept credit cards from customers as a payment option. A minimum monthly volume of credit card sales which typically varies from $5000 to $10000 is needed in most cases to obtain business funding based upon credit card receivables factoring. When merchant cash advances are obtained by a business, a lump sum payment is received based on projected future credit card processing transactions. The amount of business financing is then repaid gradually (typically over six to nine months) and automatically as credit card purchases are processed. In general, this strategy for obtaining working capital is used by many diverse businesses because they do not have another reliable commercial funding source. Because banks are routinely reducing or eliminating business lines of credit in almost all areas for small businesses, the practical need to consider this option has also increased.

This might be the perfect opportunity to review the cost structure currently in place for a business because this approach to working capital management is tied so directly to credit card processing activity. Many small business owners chose their credit card processor based upon a recommendation from a colleague or banker. It is not unusual to hear that costs or terms were not reviewed thoroughly before signing a processing agreement.

As indicated, future credit card processing activity is used to repay a business cash advance. A portion of each transaction is automatically allocated toward repayment. In order for this to happen, the processor must agree in advance to handle it properly. Some providers of credit card processing will not agree to help with the payment process required to repay a merchant cash advance. When this occurs, alternative processors can usually be arranged with minimal impact on daily business operations. A common occurrence is for a small business to realize significant cost reductions when replacing one credit card processing provider with another because costs were often overlooked when the initial agreement was signed.

Ensuring that the company providing the business financing does not rush to change credit card processors before determining if they can complete the desired working capital financing is one of the primary precautions to observe when a small business owner is considering a business cash advance. Attempts to change processing arrangements immediately are a clear indication of one of the most serious abuses seen during recent years for companies appearing to offer merchant cash advances. A more normal and appropriate approach is for the commercial funding provider to initially evaluate whether they can provide financing and in what amount. If this is acceptable to the business, the next step would be to check with the existing processor to determine their ability to facilitate repayment of the working capital to be advanced to the business borrower. Even if their current processor is willing to work with the business cash advance provider, businesses should consider asking for a review of cost saving opportunities involving their credit card processing.

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Stephen Bush is a credit card processing solutions expert who has worked with business owners for 30 years. AEX Commercial Financing Group provides business cash advances and small business finance programs
Article Source: http://www.articlealley.com/http://stephenbush.articlealley.com/business-cash-advances-and-credit-card-processing-basics-1474302.html

can I apply for credit card in different business name if I already have one?

I own 2 different business one doing good one not so good can I apply for a business credit card from the business doing good if the other already has a card and is not doing well? Both are legal business with tax ids different names however my name is on both as owner. Neither is a parent company.

Answer
The credit company will check the credit score based on the info you provide on the application.
If you have no FICA score, they will check the tax ids you provide.

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