How a Business Credit Card Cash Advance Works

How a Business Credit Card Cash Advance Works explained by professional Forex trading experts the “ForexSQ” FX trading team. 

How a Business Credit Card Cash Advance Works

Nowadays, many small business owners experience tough times such that cash flowing in is not sufficient to sustain the operation of the business. When this happens, some of them get stuck with nowhere to run to. Many tend to look for business loans from financial institutions but it becomes very difficult due to reasons such as low credit scores or lack of collateral. However, there are better ways to get cash instantly such as business credit card cash advance.

How It Works

As a business owner, it is very important to have several ways for funding your business during tough economic times.A cash advance on business credit cards is a method of turning tomorrow’s credit card sales into today’s cash flow. In simple terms it means that if your business accepts credit cards, then you can borrow cash from an advance company against your credit card sales. By doing so, your business shall be given cash which you will pay by selling future credit cards. With this kind of business funding, your business gets cash advance within a short period of time with very little paperwork involved.

However, you have to agree and pay the advance given plus a certain interest as the business agreement states. By doing so, the cash advance provider will be taking a portion of your future credit card sales on a daily basis until the whole cash advance amount owed has been fully repaid.

At the end of all your total credit card sales, the advance company’s automated retrieval process shall deduct a small percentage of your daily transactions.

The good thing about this type of payment is that the funding provider gets paid when you get paid by your clients. It is a very flexible way to increase cash flow to the business.

Apart from that, it is a very flexible method since the business cash advance provider gets paid after you have been paid by deducting a portion of your credit card sales.

What It Costs

Many companies that offer cash advances for businesses have different ways for calculating the amount that the business needs to repay. One of the methods is by calculating the cash advance owed plus a smaller percentage of between 60% and 80% APR of the amount financed. Other companies do take the amount financed multiplied by a constant factor rate. The means that the amount a business owner needs to repay is equivalent to the amount financed multiplied by the factor rate which most of the times ranges between 1.14 and 1.48.

Who Qualifies

Mostly, the major requirement for a business to qualify for a cash advance is all of its transactions are paid via credit cards. Another simple requirement is that the business have been active in terms of operation in the last six months. There are no other obstacles meaning every other business owner should qualify for this cash.

In order to be granted a cash advance by any company, the business owner needs to switch the credit card processing as well as the sale system since many advance companies do have their own proprietary hardware and software built in their POS system.


There are many benefits that a business may accrue from cash advance such as :

  • Fast Cash: Most of the times a cash advance is processed in 2 days making it very convenient if a business wants instant cash.​
  • No collateral required: It does not need any form of asset to act as security.
  • No fixed payments: The amount repaid back depends on the credit card sales.
  • No hidden fees: It is very open as dictated by the agreements.
  • No restrictions: The cash given to you has no strings attached meaning you can use it however you want.
  • Does not put your bad credit into consideration.

How a Business Credit Card Cash Advance Works Conclusion

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