Everything you need to know about the most practical way to get additional working capital for your business. Read the frequently asked questions our potential clients ask us about unsecured cash advances. We hope to answer all of your business cash advance related questions, but if you have any further questions, please don’t hesitate to contact us.
1. What is the interest rate?
This is probably the most frequently asked question about unsecured business cash advances. The answer: zero interest. Why? An unsecured business cash advance is distinct from a small business loan because it does not have an interest rate. Instead, you pay the unsecured cash advance provider back via an agreed upon percentage of your future credit card receivables or a fixed daily payment from your business checking account. Since this is a fixed rate, it is different than a loan because it does not accumulate interest over time.
2. Do I need collateral to be approved for a cash advance?
No you don’t. Plain and simple. Again, an unsecured business cash advance is not a loan so the requirements are much more lenient than those of a traditional bank loan. Therefore, you don’t need any personal collateral to secure a business cash advance.
3. Is my business qualified to secure a merchant cash advance?
That depends on what type of business you own. Assuming your business is legal, it is processing payments, and it has been in operation for at least 6 months, then you qualify for a business cash advance. While most of our customers run businesses that accept credit cards, we also offer a Bank Only Option for those businesses who don’t process credit cards. Examples of businesses that most commonly qualify for and receive funding via our merchant cash advance are restaurants, retail outlets such as grocery stores, liquor stores, boutiques, and convenience stores, service businesses such as salons, florists, spas, barber shops, dental clinics, gas stations, and many others.
4. How much money can my small business qualify for?
That depends on your credit card sales volume or your monthly gross sales volume. Typically, businesses qualify for between $5,000 to $250,000.
5. How long will it take before receiving the money?
A better question would be, “how quickly can I be funded.” Typically, it takes between 3 to 7 business days to approve a merchant but a lot of our clients are approved as quickly as 3 business days after they apply for an unsecured business cash advance. The money is typically funded within a couple of days of being approved. We make it a point to approve and fund a merchant in as little time as possible because we understand the urgency to secure additional working capital.
6. I have a low credit score. Will this affect my application?
No. Your credit history will be reviewed only as a part of our application process but it will not work against you when it comes to being approved for an unsecured business cash advance. Businesses with bad credit are encouraged to apply and many of our clients have received funding with less than perfect credit. Again, an unsecured business cash advance is not a loan, so it is not tied to your credit score.
7. How much do I have to pay to apply for an unsecured cash advance?
Nothing. Choice Business Funding does not charge anything when you apply for a cash advance. Applying is easy; it only takes a few minutes.
8. What fees do I have to pay after I get an unsecured cash advance?
Choice uses Crystal Clear Pricing and charges no fee on your business cash advance and we never charge our clients any unexpected fees or interest. There may be fees charged by the provider, which will be disclosed upfront.
9. What is my repayment schedule?
Repayment of the merchant cash advance will depend on your credit card (daily percentage) or monthly gross sales (fixed daily amount). In other words, the merchant cash advance provider, gets paid when you get paid.
10. I have an existing arrangement with another provider but I need more funding. Can you offer a better deal?
Possibly, remember you are paying a fixed cost for your current funding, call us so we can determine if you would benefit from another cash advance.
11. Does an unsecured cash advance require a personal guarantee?
There is a personal guarantee for certain alternative financing products, we will inform you of that when you start pursuing an unsecured cash advance.” item_title12=”
12. Is there a restriction as to what I can spend the unsecured cash advance on?
No, as long as the money is used for business related expenses only. For instance, you can use the money as additional working capital, inventory purchase, equipment acquisition, hiring additional employees, payroll, and more – but not for personal expenses.
13. Who can I talk to if I have a question about my account?
Call us at 513-334-6496 to speak to our Business Lending Consultants. We are available Monday - Friday 9 am to 6 pm EST. You can contact us via email at firstname.lastname@example.org.
Merchant Cash Advance Lingo
Advance Amount: The amount of money given to a business upfront in exchange for a percentage of future revenues.
Business Cash Advance: Sometimes called a merchant cash advance or a business cash advance loan, this is a financial transaction where a business “sells” a portion of future sales in exchange for a large cash payment. Payment amounts, repayment terms, and repayment amounts vary depending on the agreement reached with the advance provider.
Cash Advance Provider: A business that purchases the future sales of another business in exchange for a cash payment. Often the future sales are based on the amount the merchant processes in credit card charges on a monthly basis. The provider can be a large bank or a small business that specializes in this type of financial product.
Factoring Service Provider: A business that purchases accounts receivables, invoices, from other businesses.
Factoring Fee: The percentage that a factoring company charges for collecting on a purchased invoice.
Factor Rate: Refers to the percentage of the advance amount that the provider charges to provide the advance. The factor rate is usually between 11-32 cents per dollar of the total cash advance. This rate varies depending on credit history, business revenue amounts, and the risk the cash advance company is taking in advancing the merchant.
Daily Retrieval Rate: The dollar amount a provider collects from daily credit card revenue.
Safe Retrieval percentage: Refers to the daily retrieval rate as a percentage, which is the portion of daily sales that are “safe” to use for daily repayment without hurting the business’s cash flow need. This percentage varies from merchant to merchant depending on the volume of credit card sales and the advance amount.