What Is a Business Cash Advance?
The idea behind a business cash advance is that you sell your future sales and get funding fast. This is a great short-term solution, with payback typically happening within months. The lender takes a portion of your ongoing sales or debits on your bank account each day of business. Business cash advances are more similar to a short-term loan than a line of credit.
What Are the Business Cash Advance Requirements?
Traditional banks usually have stringent and time-consuming requirements, making them an inconvenient choice for many small businesses. This is why many businesses are attracted to business cash advances.
Each lender is unique, and some lenders may require that you maintain a minimum amount in monthly credit card transactions for a business cash advance. Different lenders also have additional requirements for how long you have been in business – usually four months to a year. Some lenders might require that you make multiple payments a month. Other lenders are more interested in your credit score, more so than your monthly credit card transactions. Lenders generally prefer a credit score of at least 500 – 600. Some lending companies are willing to offer advances to businesses who have lower credit scores, but the rates and fees for these business cash advances tend to be higher than the typical percentage.
Here are the typical minimum business cash advancement requirements:
- Having been at least 6 months in business;
- Having at least $50,000 in yearly revenue;
- Having a minimum 500 credit score.
How to Apply for a Business Cash Advance
The process of applying for a business cash advance is quite straightforward. A business cash advance can be approved in as few as 24 hours. After approval, businesses may receive the funds in a matter of days.
Most lenders have a simple application process for business cash advances online. They will generally ask for the following information:
- An email;
- The company name and address;
- A contact number;
- The loan amount;
- The yearly revenue of your business;
- The number of years you have been in business;
- Your monthly credit card volume;
- The business owner’s full name and SSN;
- The percentage of ownership;
- The home address of the business owner.
In addition, you may need to upload some of your business documents, for example:
- Your business ID;
- Financial statements;
- A credit report;
- Credit card processing statements;
- Business tax returns.
If your business doesn’t have a business credit card, you also won’t have a business credit score. The lender will check to see if your business has any current loans or has applied for financing in the past. A knowledgeable lending officer will contact you, who can answer any questions you may have about getting a business cash advance. They will help walk you through the remaining steps of the application process and any other business cash advance requirements.
After everything is all set up for your business cash advance, the lending firm will deposit the funds in your business’s bank account, generally within just a few days. You can finally get back to growing your business and moving forward!
