The Commercial Mortgage Loans Guide 

Small Business Loans

Business Cash Advances and Credit Card Processing

by Stephen A. Bush

The following key business cash advance issues are described in this Executive Summary:

1. Three business lending changes positively effecting the use of business cash advances and short-term working capital programs offered by AEX.
2. Five reasons to consider a business cash advance based on credit card processing.
3. Ten problems to avoid with merchant cash advances.
4. Six criteria for securing small business loans up to $300,000 based on business cash advances and credit card processing.

The current volatility in obtaining working capital and other commercial financing has changed how merchant cash advances should be evaluated by small business owners. Here are three key factors behind the rapidly-changing small business funding environment:

1. Most banks are now requiring more collateral for business financing.
2. Unsecured lines of credit have been eliminated by many business lenders.
3. Many regional and local banks have stopped commercial lending.
   

All three of the changes noted above have significantly INCREASED the positive case for the AEX Business Cash Advance Program if businesses need working capital.

AN UPDATE — AEX now provides working capital loan options in addition to credit card financing that can also address the three key commercial finance change issues noted. Amounts funded through these short-term commercial loans (typically up to one year and not all businesses will qualify) are usually limited to $100,000.

1. A business cash advance based on credit card factoring is one of the few viable options for reliably obtaining short-term business financing
2. Funds can be obtained very quickly
3. There is no need for collateral
4. There should not be any up-front fees or closing costs
5. Credit card financing is available to virtually any business that accepts credit cards in their business transactions

There are a number of problems to be avoided with merchant cash advance programs.

1. Up-front fees
2. 2-3 years or more in business required to qualify
3. Maximum business cash advance of $10,000 to $50,000
4. 12 to 24 months of $10,000 to $25,000 (or more) in credit card sales required
5. Collateral required
6. Financial Statements required regardless of business cash advance amount (Note: larger merchant cash advances can involve additional information such as financials)
7. Fixed payments to pay off the business cash advance
8. Fixed term to pay off the commercial financing
9. High credit scores (frequently 680 to 700) required to qualify
10. Closing costs

1. One year operating history as retail or service business
2. If leasing: at least one year remaining on lease and in good standing with landlord
3. No open tax liens, judgments or bankruptcies
4. Business accepts credit cards as a form of payment
5. Ability to document credit card sales of $5000 or more per month for the last six months
6. Acceptable personal and business credit (minimum personal credit scores of 500)

1. Merchant cash advances from $5000 to $300,000
2. No financials required for most situations (larger business cash advances will sometimes require additional information such as financials)
3. No collateral required
4. No up-front fees or closing costs
5. No fixed payments (a small percentage of each credit card sale is collected from the processing bank as goods and services are purchased)
6. No fixed period to pay off the business cash advance (although there is a minimum of 90 days)
7. Easy 2-page application: AEX Commercial Financing Group can fax or email the application for its Small Business Loans - Business Cash Advance Program to you. This application will be requested only AFTER a discussion with AEX. Please note our policy provided below about avoiding the use of online business financing applications.

AEX STRONGLY advises business owners NOT to complete an online business financing application.

A borrower working with AEX Commercial Financing Group will not be asked to submit an application until they have completed a detailed discussion with AEX confirming that working capital funding is feasible for their particular business situation.