Merchant Funding

For sources of quick cash for your business, you might want to consider taking advantage of merchant funding instead of a bank loan. Various companies are in the business of lending money to businesses that need some cash for various needs These loans take on various faces including invoice factoring, capital loans, loans against future earnings, and much more. Merchant funding gives you a way to bring some additional income into your business while you are waiting for payments from customers or other sources of revenue.

Some companies offering merchant funding require you to have a Visa/MasterCard processing account. In these cases, they advance cash against future Visa or MasterCard sales. Of course, to do this they will want to see some history of past sales, so you will probably need at least a one year history with your merchant account to verify the amount of sales that usually go through credit card processing.

If you have a new merchant account or are one of the few businesses that don't accept credit cards, you may be able to obtain merchant funding through the sale of your accounts receivable or a loan against future sales. Both of these are options for established businesses but for a new business, there are less options since there is little past history on which to base future sales.

Merchant funding can be a viable option to bank financing for a temporary situation, but it can be dangerous if you take a loan against future sales during a period of economic distress. At the same time, if you borrow from the bank, you can face the same dilemma. The key is to know when it's a good economic move to use merchant funding rather than going to the bank to borrow the money for working capital.