You may have heard of Credit Card Receivable Financing (CCRF) but aren’t sure what it is. CCRF can be used by many businesses that don’t qualify to receive traditional bank financing. Credit card receivable financing is an easy, quick and convenient way to get working capital or a short-term business loan. It’s available for businesses that have accepted credit cards for payment for their goods or services in the past six months. It is not available for new business loans, start-up funding, or start-up loans and david milberg will explain this later. Many business owners don’t know the difference between Merchant cash advances or business cash advances and Credit card receivable financing. They are similar in terms of eligibility, term length, and repayment methods – but they are quite different.
Both are credit card receivables financing
However, the main difference and the most important between them is that a Merchant Cash Advance is the actual purchase of future credit card receivables at an attractive rate. Although it is unsecured financing, it is not considered a loan. Similar to “Accounts Receivable Finance,” the same concept applies. Your business sells its receivables at an unsecured rate for cash you don’t need right now, and you agree that you will repay the funds with future revenue. The company that provides the funding does not have to set a rate of interest because it purchases future credit card sales. They cannot call the interest charged interest. It’s called “the cost to money.” The amount you are charged will depend on your business. These david Milberg factors will be covered in an article specifically about Merchant Cash Advances.
CCRF allows the business to still use future credit sales as a basis for determining the amount of funding. However, CCRF is a true regulated loan, and the requirements are more complex than other MCA’s. The costs are typically 50-80% lower than many MCA’s.
Are You Interested in Financing?
Many small business owners looking to get a business loan, unsecured credit line or financing will apply for CCRF to save money. Many owners with an MCA will use CCRF for their existing advance to pay it off. This is because they can save so much money.
Another benefit of CCRF is that many businesses will not establish a credit score to qualify for loans. CCRF allows business owners to report to credit agencies any payments made to an unsecured loan so that a repayment history can be established. This could improve credit scores and help with future bank loan applications.