In This article, we will learn all you need to know about cash advancement app, e.g from Amscot.
To obtain a cash advance at Amscot, Amscot will ask that you fill out a short application and sign a cash advance agreement.
They will exchange one of your checks for a maximum of $ 500 and we will retain it without presenting it to the bank for a period of up to 31 days.
Amscot charges a flat transaction fee for this service. Please see the table for cash advance fees HERE.
What is a Cash Advance?
Cash advances are a financial option that allows consumers to access short-term, small-amount loans. When completing a short application, consumers can access up to $ 500 to cover small expenses, which are often unexpected.
It is a fast, convenient service and often costs less than the fees and fines caused by late payment of an account.
Work is a top priority for small business owners.
Cash flow keeps your business moving, and so-called merchant cash advances seem to be the fastest way to have cash at your disposal. But before you launch to request a cash advance to go the fast lane, you should take into account the following: this option can be more expensive than you expect.
In this article, we will explain in detail how cash advances work, their advantages and disadvantages, and what is required to apply for one. You will be surprised to know that there are other equally attractive alternative loan options with more long-term advantages.
What is a cash advance? – Basic concepts
What is a cash advance? Cash advances are a financial option that allows consumers to access loans that are generally small and short-term.
Based on credit card sales, businesses receive a cash advance from a financial company through direct deposit.
Financing amounts range from approximately $ 5,000 to $ 1,000,000, depending on the annual sales made with a company’s credit card.
The business owner agrees to repay the loan with an added amount that is based on a percentage of sales. This results in the daily payment to the lender if that is the frequency with which your credit card processor pays you.
For example, with a $ 25,000 advance, a business owner may choose to pay 10% (or another percentage) of daily, weekly, or monthly sales based on the average monthly income on the business’s credit card. That percentage is known as the retention percentage until the money, plus fees are returned to the lender.
Business owners accept payment terms based on a factorial rate that averages between 1.1 and 1.4. For example, when applying a factor 1.2 rate to the $ 25,000 advance mentioned above, the total refund amount would be $ 30,000.
Be aware that this can result in a very expensive form of financing. Paying a factorial rate of 1.2 on a 4-month loan is equivalent to an APR of 112%! So, before requesting a cash advance, we recommend using a Factor Rate to APR Converter to know exactly the cost of your cash advance and what interest it would be if it were a traditional loan.
Cash advances are usually short term: financing lasts between 3 and 12 months.
One of the benefits of cash advances is that lenders are generally very flexible about your credit score (remember: a solid credit score is one of the most common requirements among traditional lenders). They generally do not require a minimum score and base their approval decision primarily on merchant account activity.
Cash advances are an attractive option for business owners who need money quickly to buy new equipment, replenish inventory, or have more cash available to cover payroll and make their business prosper.
Cash advances are also attractive because of their speed: you can have the money available in 2 to 5 days. Also, there are fewer requirements to obtain them compared to traditional loans. For example, you do not need to present a guarantee.
However, before rushing to apply for a cash advance due to these attractions (no collateral, quick access to funds, and fewer requirements), you should consider other options.
Camino Financial is an alternative lender that does not require collateral, has less stringent requirements than most lenders, and a quick and easy process: You can receive the money you need within 4-10 business days.
You can check the section below to help you decide if a cash advance is a good option for your company:
Quick cash to achieve your company’s goals
A low credit score is not an inconvenience to request it
They may be suitable for seasonal businesses such as certain restaurants, shops, or tourist services where sales fluctuate
The simple and hassle-free application process, with fewer requirements than most commercial loans
Like any other business loan, the cost (lender fees or factor rate) can be deducted from your taxes.
You must have an account with a credit card processor
The average annual percentage rate is between 80% and 120%
Some lenders require a history of more than two years for sale.