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For small business owners to get short term business financing relatively quickly, business cash advance services are an increasingly important financing tool. This strategy for obtaining working capital financing is used by many diverse businesses because they do not have another reliable commercial funding source. Since banks are routinely reducing or eliminating business lines of credit in almost all areas for small businesses, the practical need to consider this option has also increased. To obtain business funding based upon credit card factoring, a minimum monthly volume of credit card sales is required. When merchant cash advances are obtained by a business, a lump sum payment is received based on projected future credit card processing transactions. The business financing is repaid gradually and automatically (usually covering about six to nine months) as credit card transactions are processed.

As mentioned, to repay a business cash advance, future credit card processing activity is used. To accomplish the repayment, a portion of each transaction is automatically allocated. The processor must agree in advance to handle the requirement in order for this to happen. Helping in this way with the merchant cash advance repayment process will not be accepted by all credit card processing providers. With minimal impact on daily business operations, alternative processors can usually be arranged when this happens. With a thorough review of working capital management services, a common occurrence is for a small business to realize significant cost reductions when replacing one credit card processing provider with another because costs were often overlooked when the initial agreement was signed.

It is not unusual to hear that costs or terms were not reviewed thoroughly before signing a processing agreement, often because small business owners chose their credit card processor based upon a recommendation from a colleague or banker. Even if their current processor is willing to work with the business cash advance provider, businesses should consider asking for a review of cost saving opportunities involving their credit card processing. This might be the perfect opportunity to review the cost structure currently in place for a business because this approach to small business finance options is tied so directly to credit card processing activity.