Our Blog

Using Credit Card Receivables Factoring To Secure Working Capital For Your Business

There are many ways to get working capital for your business, but not all of them are created equal. If you have not yet looked into credit card receivables factoring then this might be a very smart way to go. While it is not the perfect solution for every business’s situation, it is often one that can work for you if your business accepts credit cards. By taking a closer look at this method of funding, you can determine whether or not it is the best solution for your needs and if so, find out how to get started taking advantage of it.


What is Credit Card Receivables Factoring and How Does It Work?


For people who are unable to, or simply do not want to obtain traditional financing, this is another option. You may sometimes hear credit card receivables factoring referred to as a merchant cash advance, another name for the same type of funding. One of the many advantages of this route is that you do not have nearly as many hurdles to jump over in order to have your application approved. Since it is not a loan per say, the costs are going to be a little bit different than what you would expect with a typical business loan. Instead of credit worthiness, your credit card receivables are going to be the basis for the amount of money you end up getting, the repayment fee and all of the rest of the details that go with the decision of the company doing the factoring. Once the company decides to purchase your future credit card receivables, the waiting period for receiving the cash is normally rather short in comparison with traditional small business loans.


What Should You Look for in Credit Card Receivables Factoring?


When it comes to getting this kind of funding, you normally have quite a few different companies you could choose to work with. It is best if you decide on a company that that fits your needs well and this could mean shopping around. Not all companies charge an application fee, but some will. If there is going to be an origination fee on the credit card receivables factoring you are being offered, you will want to know that up front as well. These financing charges typically vary depending on how much risk the company decides it is taking by investing in your business. Finally, a receivables rate is typically the way that these companies will recoup their money and you need to know what percentage this rate is. This could be anywhere from 25% to 30% of your future sales until the advance is paid back and that is why it is important to understand that charge up front. It might not be called interest because this is not a loan, but it does function essentially the same way.


What Are Some Considerations for Credit Card Receivables Factoring?


One thing to keep in mind is that this is not the cheapest type of funding available to a business in most cases. You can normally infuse cash into a business for lower costs, but those lower costs usually also mean that the waiting period to get the money is going to be longer. It will also take some looking around and considering the health of your own business before you decide on the best company to work with. Depending on how robust your sales and profits are, you can get better offers. Comparisons are always going to help you out and you should do these before making any kind of final decision whenever possible so that you get the best deal.


Why is Credit Card Receivables Factoring Hot Today?


The fact is, getting a traditional small business loan is much harder since the global financial recession that took place around 2007-2008. Today’s companies have to go through a lot of paper work, have good credit ratings and deal with a lot of stipulations that can end up being a hindrance to the way they do business. With credit card receivables factoring, you can get the money you need and start putting it to work so that paying off the fees is not going to be difficult. Since you are not being judged based on a credit score it can be much easier to get the working capital you need and get it quickly. All of these factors are incredibly attractive to many business owners in today’s economic climate and that has helped this type of funding become more popular than ever.

Getting financing for your small business doesn’t have to be as tough as you think…To apply for Credit Card Receivables Factoring and receive multiple rate quotes Click Here!

Topics: Small Business Loans

Ready to Compare Rates for Small Business Loans & Financing?

Share this post:

Written by

    What are your average monthly sales deposits to your Business Bank Account?

    How long has your business been active?

    How much funding do you need for your business?

    What is your estimated credit score/rating?