What Is Credit Card Receivable Financing?

If your company is seeking or has been turned down for a small business loan, an unsecured line of credit, unsecured business financing, or other short-term business financing to use as “working capital” you may have heard of Credit Card Receivable Financing (CCRF) – but you’re not quite sure what it is. CCRF is an alternative funding solution that many existing businesses are able to use when they don’t qualify for traditional bank financing.

Credit Card Receivable Financing is a fast, easy and convenient way of getting working capital or a short-term business loan for a business that has accepted credit cards as payment for its goods or services for at least the previous six months. Unfortunately, it is not available for start-up loans, start-up funding, new business loans as will be explained later in this article.

However, many business owners still don’t fully understand the difference between Merchant Cash Advances (or business cash advances) and Credit Card Receivable Financing. The reason is they are very similar in the requirements to qualify, term length and repayment method – but they are different.

While both are known as a form of credit card receivables funding, the primary (and most important) difference is; a Merchant Cash Advance (MCA) is the actual “purchase” of your future credit card receivables at a discounted rate. It is unsecured financing, but it’s not classified as a loan. Much like “Accounts Receivable Financing” the same concept applies, that is; your business sells its receivables at a discount for cash that you need now and you agree to repay the funds from future revenues. Since this is a purchase of future credit card sales the company providing the funding is not required to give an established rate of interest. In fact they cannot even call what is charged interest, it’s called “the cost of money” and the amount charged can vary based on factors having to do with your business. (Those factors will be discussed in another article specifically related to Merchant Cash Advances).

With CCRF the business still uses future credit sales as a basis on which the lender will determine the amount of funding, but the difference is that CCRF is a true regulated “business loan” and as such the qualifications are slightly more involved but the costs are usually 50-80% less than most MCA’s.

When attempting to secure any type of business loan, unsecured business credit line, or business financing many new small business owners will try to qualify for CCRF because of the savings benefit it offers. In fact, many owners who currently have a MCA will use CCRF to pay off the existing advance because of how much they are able to save on the costs of money.

Another advantage of CCRF is, in the first few years many businesses are unable to establish a credit history that banks will require to qualify for loans. With CCRF as payments are made the business owner can make sure those payments, to an unsecured business loan, are reported to credit agencies so that a history of repayment is being made. This can potentially improve the credit score and possibly help in future bank loan applications. In addition, there could be tax advantages that your accountant may be familiar with regarding interest payment and so forth.

With both CCRF and MCA the amount of funding that you receive depends on your monthly credit card sales. And funding typically ranges between 100 to 150% of your monthly credit card sales average. For example, if your businesses monthly Visa/MasterCard sales average is $10,000 lenders can fund $10,000 to as high as $15,000 for the normal six to twelve month terms that are offered. Remember, this unsecured business loan is short-term working capital so don’t expect a 36 or 60 month payment term.

To qualify, your business must have processed at least $3,000 in Visa/MasterCard transactions each month for the previous six months, be in business for minimum of one year, have a minimum FICO score of 540 or greater, have at least one year remaining on your business lease or own the property and no open bankruptcies, foreclosures or liens (some liens with payments plans may be OK). There is no collateral required and the term is usually six to twelve months.

Read more Articles on;

  • CC Receivable Financing
  • Floral Business Easy Loans
  • Merchant Cash Advance
  • Easy Small Business Loans
  • Creative Marketing/Financing
  • Medical Office Patient Financing
  • Customer Finance Auto Repair
  • Easy Pay Patient Financing
  • Medical Optimization
  • Small Business
  • Financing New Business
  • Veterinary Patient Financing
  • Auto Repair Marketing
  • What is CCRF
  • and more Information in our blog. (See link below!)

Car Refinance – FAQs

Refinancing of car loans has become the new trend in the current fiscal situation. There are millions of people who are left toiled and moiled by the recent recession in the economy. One would even call it as a depression as most of the millionaires were almost bankrupted. People who have obtained auto loans found it very difficult to repay the loans. Here is a new way to reduce your monthly payments towards the auto loans by getting cheaper interest rates. However, there are lots of doubts and queries residing in the hearts of borrowers. I have tried to clear most of your queries here.

An auto refinance loan is a loan with lower interest rate that is taken to pay back the older loans that had a higher rate of interest and higher monthly payments. The borrowers might decide to go with the same old lenders or might look out for a new lender to get better terms and conditions for the loans.

The new lender will pay off the existing loan debt with the old lender and the title will be now transferred to the new lender.

Reason to refinance:
The ultimate aim of refinancing car loans is to obtain lower interest rates. The period of loan can be extended and can have flexible loan terms by which huge amount of money can be saved.

Time to refinance the loan:
The exact time to refinance the auto loan really depends on the financial situation of the borrower. This will vary according to the needs of the individual. If you are not able to bear the brunt of paying lump sum amounts as monthly installments, then you can very well opt for the refinancing. The early you refinance the more you will be able to save.

There are exactly 2 kinds of fees that are standard for the refinancing of car loans. One is associated with the transfer of lien holder fees that is usually around $5 to $10 and a state re-registration/administration fee of $5

How much can I save?
The amount of savings depends on the remaining amount of the existing loan. If you had not repaid most of the old loan, probably you could gain. The difference in both the amount holds the key. Similarly the different in the interest rate of the new loan and old loan plays a vital role in deciding the amount.

Popularity of auto refinancing loans:
This is increasing in its rate of popularity as people are able to get it at lower interest rates and is also hassle free. The entire process could be finished within an hour.

How to approach the financial institutions?
Every lending institution has got websites for their company. It is enough to fill out their online application request forms and the responsible officials will get back to you in a shorter duration.

What knowledge does a borrower has to have while refinancing?
The borrowers must have done a thorough research on various lending institutions and analyze their lending rates. This will help them to choose the better one to save money.