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View Full Version : Small biz loan - payback via credit card?



dr_nigel_c
03-30-2016, 03:19 PM
Good afternoon everyone!

Curious -- I came across a site promoting small business funding. Specifically, loans that get paid back a little each time I run a customers credit card.

Does anyone know if these are worthwhile?

Thanks!

IgniteGOC
03-30-2016, 03:31 PM
I'd be more interested in seeing the fees attached to this process. Do you have a fee schedule for it?

Harold Mansfield
03-30-2016, 03:44 PM
Good afternoon everyone!

Curious -- I came across a site promoting small business funding. Specifically, loans that get paid back a little each time I run a customers credit card.

Does anyone know if these are worthwhile?

Thanks!

I've heard of this before. I think we've actually discussed it around here. I remember not feeling all warm and fuzzy about it, but can't put my finger on the particulars.
I'll try and find the discussion.

turboguy
03-30-2016, 04:12 PM
I have heard a lot of services like that advertised. The ones I have heard advertised require around 10 grand a month in credit card processing and the impression I have is that they give you the cash up front and then take all the proceeds from the credit cards or at least a partial amount until it is paid back. It sounds to me a little like robbing Peter to pay Paul. You have the cash up front but your cash flow is going to be greatly reduced until it is paid back. I am sure the interest they charge isn't cheap as well. I could think of a few situations where it might be worth it but for most people it is just going to be an extra expense that will make it harder to be profitable. It is far better to just work on reducing expenses and build up cash on your own.

The only credit that to me may be worth it is if you can get money interest free on a credit card for 18 months or so and use that to increase sales or take enough discounts you could not take otherwise to improve your products and even then it is better to plan to have it paid off in full after the 18 months. The bad part is that people who have lots of money can get all the cheap money they want and those who really need it have to pay through the nose.

dr_nigel_c
03-31-2016, 08:56 AM
Thanks for the feedback! I'll try and dig up the fee schedule and post it here as a follow-up. I had just done a google search for "small business funding" and saw a few that looked interesting...

Thanks!

IgniteGOC
03-31-2016, 09:41 AM
There are definitely plenty of ways for business funding!

I do a lot of loan and capital brokering, so there are innumerable options out there.

Are you comfortable with sharing about how much you're looking to have funded? I could share a few options for you to pursue depending on how much you're looking for, if it's for real estate, etc. Different options have different fees, but they also require different ranges from equity, to length of term, and so forth

Toliver & Bancroft
04-16-2016, 04:55 PM
Hi,

Just offering my 2 cents here- that type of financing is an alternative lending product (one we offer) in which an owner is advanced a portion of his future receivables. In essence, he is selling his future receivables at a discounted rate. It's not necessary that you accept credit cards however.

The owner has several ways of paying back the advance including ACH fixed amounts from their bank account (for non credit card processing business owners), split funding from their credit card terminal, and lockbox methods. Prior to the advance being paid off, the owner also has an opportunity to re-new his/her advance and obtain additional funds. Since the advance is not an actual business loan, this means that there is no collateral attached to it, and thus it is an unsecured advance and is not tied to any personal or business assets.

It's a really good program if you need capital quickly, because it requires limited documentation (just a few months of bank statements).

michmo
06-28-2016, 03:27 PM
I agree with IgniteGOC there might be a lot of fees attached to that. I know someone who had a bad experience with a similar company in terms of hidden fees.

GroupISO
07-20-2016, 02:08 PM
Yes, I work at a credit card processing/merchant account company and we offer what you're describing. It's called a merchant cash advance. In essence, the credit card processing company is buying your future receivables. You just pay back little by little through your credit card sales. Of course, the fees can vary and there are some requirements (definitely easier than getting a biz loan) so best to check out all the details from the proposal.

It works great for those who can't qualify for a normal loan and need to get cash fast.