One of the hurdles that one must face in the world of retail is business financing. Whether you are starting a new business, trying to keep a current company afloat, or seeking to expand and grow into new territory, capital has to come from somewhere, and finding it is a large part of the process. The traditional way to find capital is either to be born rich, have wealthy relatives willing to invest in your venture, or get a loan from a bank.
Getting a bank loan for Retail Business Financingis harder now than it has ever been in the past. This is largely due to difficult financial and economic times, but other factors make it a rigorous process as well. One must have nearly impeccable credit, an extremely sound business plan, and even a significant amount of experience and knowledge about the venture which you are proposing. Even if you have all of that, many banks simply are not loaning money during hard times unless you are one of the very wealthy who present much less risk.
For this reason, many people who are in search of capital in order to start a venture, save a fledgling retail store, or grow a company rely more upon their own personal assets than external investors. Personal savings, home equity, life insurance policies, IRA accounts and other assets are often used to support retail business financing at significant personal risk. In the end, one may lose property (such as a house), deplete retirement funds or no longer have the security of life insurance, which creates tremendous risk.
Many retailers and merchants however have discovered quick access to capital for retail business financing through the vehicle of merchant cash advances. The basic premise is that a single lump amount of capital is paid to the business owners, such as (for example), $25,000. The business is merely getting an advance on profits that will be made from future credit and debit card transactions. This money is routed back to the processor or provider over time every time a credit or debit card payment is made, usually through an automatic transaction, until the full amount is replenished. The provider will charge a premium for the advance, which is paid the same way, as well.
The premium may be somewhat costly, but most merchants feel it is worth it in order to get quick access to needed capital without putting their personal lives and finances at extreme risk. The accessibility, easy qualifying factors, as well as quick access to capital makes merchant cash advances one of the more popular means of retail business financing in a difficult and uneasy economy.