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    3 Replies Latest reply on Mar 29, 2008 9:45 AM by dublincpa

    Payday loan for Small Business

    bankpig Adventurer

      This month's Inc. magazine printed a must read article for cash-strapped, small businesses thinking about a merchant cash advance: "Thanks, but no thanks. Why to avoid taking out a merchant cash advance" (article not published on Inc.com yet).

       


      Unfortunately, small business credit is tight in our current environment. As an insider, it's no exaggeration to say banks do not want to lend right now. Now more than ever, do stereotypes hold true, "Banks only lend to businesses that don't need loans."

       


      Inc. compares a merchant cash advance- also known as credit and receivables financing-to the business equivalent of a payday loan. A business owner is advanced cash sum-usually less than $150,000, often within a week and without the amount of paperwork required by banks. The merchant agrees to pay back the principal plus a free, which is typically at least 25 percent of the total amount advanced but sometimes much more. The lender collects the money by taking a portion of the business's credit card sales until the debt is paid.

       


      I recommend reading the full article for more details. I'll provide a Inc. link as soon as the article is available online.