Retail Store Funding

How Retail Store Funding Can Help Your Business

The downward spiral that small businesses nationwide are experiencing is further exacerbated by the worst “drought” of bank lending since 1945. A survey carried out by National Small Business Association (NSBA) survey discovered during a query in December 2009, that 39% of business owners found it difficult to find proper financing for their businesses.

Those businesses that have been incurring large debts in the use of credit cards will have realized that this method is becoming less dependable for urgent-situation financing. It is estimated that greater than 33% of business owners use credit cards to finance over 25% of their operations, notwithstanding 79% attest to the worsening of credit cards terms during the past year or so. Consumer spending is moving up on the graph, but still has a long steady climb before approaching an acceptable position with respect to improved revenue.

The aforementioned illustrates the whole rational behind the increase in retail store funding through the use of merchant cash advances. Companies that process card sales find console in repaying their business cash advances through monthly credit card sales; the reason for this being the repayment of the advances by way of future credit card sales, where no collateral is necessary making this an unsecured loan.

The Dilemma faced by Retail Store Owners

It’s a known fact that a large amount of banks and traditional lending institutions often reject loan applications for financing from retail stores.

Most banks and conventional lending sources will often turn down loan applications for retail store financing. In spite of a loan applicant’s good credit rating, banks are still reluctant to grant loans, (usually considered small and insignificant) to small retail enterprises. This leads to the undesirable situation where these businesses often lack the working capital to carry on their business operations.

The Business Cash Advance – How Can it be Used?

You are eligible once you accept the main credit card providers like Visa and Master Card. Involving ongoing and future credit card sales. If your retail store business allows the use of Visa, Master Card, American Express or Discover Card, you become a prime candidate for this kind of funding. The key advantage is that one can repay a loan without affecting his or her daily cash flow.

Some Popular Uses:

  • Cash available for restoration and growth
  • For better cash flow management
  • Bulk purchasing of business equipment and supplies
  • All-purpose working capital use

It is gratifying for a business owner to experience the freedom in acquiring a loan without requiring to place restrictions on the use of those funds obtained. Apart from having the cash for immediate routine needs, the business owner -manager will be at ease in controlling his cash flow and maintaining a secure level of working capital.

How to Get Business Financing With Bad Personal Credit

Banks REQUIRE good credit to get approved as you know. Most people only go to their bank when they need money. But the most common business bank loan, SBA loans, only account for 1.1% of all business loans (Department of Revenue 2013). The reality is the big banks are NOT the suppliers of most business loans. And even though they require good credit to qualify, many sources don’t.

SBA and other bank conventional loans are tough to qualify for because the lender and SBA will evaluate ALL aspects of the business and the business owner for approval. To get approved all aspects of the business and business owner’s personal finances must be near PERFECT. There is no question that SBA loans are tough to qualify for. This is why according to the Small Business Lending Index, over 89% of business applications are denied by the big banks.

Private investors are a great source of business funding. They want average or better credit of 650 scores or higher in most cases. They will also want solid financials for at least two years. Think of private money as being for SBA and conventional bank loans that just miss the mark.

Does the business have existing cash flow proven by bank statements, NOT tax returns? Does the business have over $60k annually received in credit card sales? Does the business have over $120k annually going through their bank account? If the answer is yes then revenue financing or merchant advances might be the perfect funding product.

You must be in business six months for merchant advances and revenue lending. No startup businesses can qualify and you must have 10 monthly deposits or more. Most advertising you see for “bad credit business financing” are these products. These are short term “advances” of 6-18 months. Mostly short term at first, then when half is paid down lender will lend more money at a longer term. Loan amounts up to $500,000 and loan amounts equal to 8-12% of annual revenue per bank statements. For example, a company that has $300,000 in sales might get $30,000 advance initially.

With revenue and merchant financing 500 credit scores accepted and are COMMON with this type of lending. Bad credit is okay as long as you aren’t actively in trouble such as in a bankruptcy or have serious tax liens or judgments.

Collateral based lending lends you money based on the strength of your collateral. Since your collateral offsets the lender’s risk, you can be approved with bad credit and still get REALLY good terms. Common BUSINESS collateral might include account receivables, inventory and equipment.

With account receivable financing you can secure up to 80% of receivables within 24 hours of approval. You must be in business for at least one year and receivables must be from another business. Rates are commonly 1.25-5%.

You can also use your inventory as collateral for financing and secure inventory financing. The minimum inventory loan amount is $150,000 and the general loan to value (cost) is 50%; thus, inventory value would have to be $300,000 to qualify. Rates are normally 2% monthly on the outstanding loan balance. Example is a factory or retail store.

Business Cash in Advance

Think back to when you first opened your business. Remember the sigh of relief you breathed the day you opened your business’s doors to the public, the delight that consumed you as the first transaction was made, the pride you feel everyday, when you watch yet another satisfied customer walk out the door?

Even though the path of business ownership is full of excitement and happiness, surely you can also remember a time when you needed business cash in advance. In fact, you probably don’t even need to think back very far, because for a small business owner, cash is always a necessity. That’s why merchant cash advance lenders have developed a way to give small business owners the business cash they need in advance.

Through a process called credit card factoring, small business owners can use their businesses’ future credit card sales as a means of acquiring cash for their businesses immediately. Based on a business owner’s monthly credit card sales volume he/she could receive up to $500,000 to spend on things such as advertisement, renovation, equipment and inventory.

One reason that the merchant cash advance is a preferred method of business financing is because of the speed in which one can have the funds wired into his/her account. When you need cash fast, you don’t have time to waste on lengthy applications, extended review processes and prolonged funding times.

It only takes a couple of minutes to apply for a merchant cash advance and the application can be approved in 48 hours. Once a merchant cash advance application is approved, funds can be wired into the borrower’s account in ten business days.

The opportunity to get business cash in advance is one that should not be passed up, especially since getting business funds through other traditional sources has become virtually impossible.