How To Get A Small Business Factoring Agreement

How To Get A Small Business Factoring Agreement For Your Establishment

There are a number of ways to secure working capital for your restaurant, but, not all of them involve a traditional loan. Small business factoring using your merchant account is actually a form of factoring. Small business factoring is a method whereby a company sells a percentage of its estimated credit card transactions to a third party – the factor – at a reduced rate in exchange for cash with which to fund the business quickly.


In today’s economic situation, it is no shock that a lot of new businesses are having a very tough time meeting the requirements for standard business loans through a bank. Throughout America banks are very tight when it comes to their working capital right now. Thankfully, business factoring via factoring companies are always available and the items needed to qualify are way less stringent than those obtained at a typical bank.

To acquire this type of unsecured financing, most staffing factoring companies like to see your company to have been in business for at least 1 year and transacting credit cards for at least six months. Since paying back the working capital is simply correlated to credit and debit card transactions, evidence of this transactions is also mandatory.

A percentage of these future credit card receipts is agreed upon as the daily repayment capture, easing the financial hardship for the company in a slow period. Contrary to a bank small business loan, the daily capture capability of a factoring agreement provides business owners with the ability to return the funds at a manageable pace instead of being accountable for set monthly payments that will make the business shut down.

Being that this money is not procured in a standard loan, if the merchant fails to meet the requirements of the arrangement, for example, using different credit card services to process payments, they can still held personally responsible for the rest of the advance.
Nevertheless, for a large number of start-up corporations, this form of financing is very optimal. Flexible payback terms, rapid access to necessary working capital and simpler acquisition of said financing, makes merchant advances a great option for many companies.

Factoring Company

Also when you borrow money from friends and family they will now believe they have a say as to how to operate your business. You have labored to get where you are and the furthest thing you want is a boss. A merchant advance can help to provide the money you need to build your business. Although this type of program is more costly than a typical loan, it may be extremely useful for many businesses.

The best thing would be to look into your choices. There are several businesses offering similar programs. Make certain you don’t pay processing fees and be certain to review your offers to make sure you obtain the best approval you can.