In order to stay competitive more and more small business have changed from cash only sales to accepting payments for goods and services by consumers using credit cards. However, while this may increase their sales and help their business revenues to grow it takes time for merchants to see the actual money paid into their business account.
If a good portion of a small business’s income comes from credit card sales there may be times when the actual cash the business has to pay for inventory or even pay their employees may be extremely tight. In such cases a small business may need a loan to hold them over until that revenue from those credit cards starts streaming in. While a traditional term loan may be out of the question, small business owners may be able to get a loan based on those credit card sales.
Merchant Loans Based On Credit Card Sales
Some lenders will lend small businesses money based on their credit card sales. Instead of a term loan with set monthly payments the business repays the loan based on a percentage of their credit card sales. Months when business is good the business pays back more of the low and months when the business is slower they pay less of the loan. This means that you may either be able to pay the loan faster than expected or it may take much more time than expected to pay off the loan.
What You Need to Get A Loan Based On Credit Card Sales
· You must be able to supply 3-6 of your merchant credit card processing statements. This will show the number of credit cards you process each day and which credit card companies were use to make the sales.
· The lender then predicts the amount of credit card sales your business will do over the next several months and offer to purchase a portion of those credit card sales at a discounted price.
· If an agreement is reached then the lender gives the business the agreed upon lump sum and then will get split each days credit card sales until the cash advanced is completely paid back.
· Since it is impossible to know how the exact amount of sales for any given day, it is impossible to predict how long it will take to pay back the loan.
Who Can Qualify for a Business Loan Base on Credit Card Sales?
Any business that processes credit cards using a merchants account may be able to qualify for a credit card based loan. If you take in over $8000 dollars a month from such credit cards as Visa, MasterCard, Discover or American Express you will likely be able to get a business loan based on those credit card sales.
Shop around for lender that will give you the best deal of that Point of Sale (credit card) based business loan and continue to grow your small business.