The terminology associated with a business cash advance can be confusing and familiarizing yourself with the definitions is an important first step towards sound borrowing. Here are some concepts and terms to get you started.
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Business Cash Advance- This is often called a merchant cash advance or a business cash advance loan. When accepting a cash advance you are selling future credit sales. The terms of repayments depends on payments amounts and the agreements reached with the provider. A business loan and business cash advance are two different things.
Factoring Service Provider- A business purchases accounts receivable loans from other businesses.
Factoring Fee- a factoring fee is the percent that a factoring company charges for collecting on a purchased invoice.
Advance Amount- This is the amount of money given to a business up front in exchange for a percentage of revenues in the future.
Daily Retrieval Rate- This is the amount a collector can collect from daily credit card revenue.
Safe Retrieval %- This is the amount that is safe to be retrieved for daily repayment. This can all vary depending on the amount of credit card sales and the advance amount.
Factor Rate- A factor rate is often referred to as a “provider fee” and it is the percentage of the advance amount that the provider charges to provide the advance. The factor rate can vary but usually falls in between 30-35% of the total cash advance. Credit history, business revenue totals and risk for the provider all factor in the factor rate.
Cash Advance Table of Contents
* Business Cash Advance Help – The Guide
* Merchant Cash Advance Terms
* Who is suited for a Merchant Advances or Factoring Services?
* Who Qualifies for a Business Cash Advance Loan?
* The Cash Advance System
* How Much Does a Business Cash Advance Cost?
* How to choose a Business Cash Advance or Factoring Provider
* Merchant Cash Advance Tips
