Merchant Funding Offers Options for Seasonal Businesses

Restaurants. Holiday boutiques. Sports stores. All are seasonally-bound businesses and all require special financing options to remain solvent. Merchant funding is certainly a fave with these and other non-seasonal businesses looking for start-up or expansion capital. Here’s how merchant funding financing works.

Merchant Funding and Other Options
AllBusiness reveals the characteristics of merchant funding that make this form of financing so attractive to those businesses that disdain the traditional lending process. The money advance is based on potential credit card sales. That means no down payments, no APRs and no credit checks. The downside is that you’ll probably have to open up a merchant account with your vendor.

Canadian Merchant Funding Streamlines
Canada has made the merchant funding process even easier to attain by tying in their lending with a collection of small business banks. Businesses no longer have to change banks--or even account numbers--when they apply for merchant funding. All requests go through a central processing entity that dispenses capital through existing accounts.

Refining the Merchant Funding Strategy
As the merchant funding process ages, the process is beginning to mold to the needs of small to mid-sized businesses. One way to illustrate the change is through flexible lending criteria. Businesses must simply show up to a year of credit card sales receipts and proof that the business isn’t bankrupt or in serious financial disarray.

Merchant funding has been around for ages in some form or another. But recent developments in the industry are making it an increasingly attractive way to earn financial backing.

Business Cash Blues: Sources of Cash Scarce and Where Yours Might Be Hiding

The Small versus Large Business: Cash Flow Reveals A Glaring Divide
According to Cortera, a community-driven business information company covering businesses with less than 500 employees, there’s a growing gap between the payment behaviors of large and small businesses. In fact, small businesses are paying invoices 25 percent slower than a year ago and 20 percent slower than the overall business average. While that may be good news for large businesses, analysts believe the growing divide signals a clear warning that the average small business owner is in trouble.

Some Small Businesses Stop Accepting Cash Altogether
As scary as that sounds for the consumer, it’s actually happening with small business all across the country. For example, Twin Cities Business writer Hans Eisenbeis reveals that restaurants in the northeast are restricting sales to customers with plastic exclusively. While the practice encourages flexibility and privacy, the movement weakens the value of the dollar in theory and practice--something that the country can hardly afford.

Find Your Hidden Business Cash Sources
Susan Ward, About.com’s Guide to Small Business: Canada, suggests looking to outside help in raising your business’ cash flow. For example, cloud computing leverages existing technology resources to lower your tech expenses. Also, bartering services with other businesses encourages welcomed exchange without tying up business cash in the process. And finally, peer-to-peer lending takes traditional big banks out of an already complex economic network-- a trend that should continue in the near future.

Venture Capital and Equity Funding Tap Out--But Business Funding Options Do Exist

The Venture Capital Industry Takes It on the Chin
If CEOs have their minds on venture capital, they better come up with a contingency plan--and fast. Michelle Meyers, cnet news associate editor for media, entertainment and politics, reveals that venture capitalists saw a 50 percent decline in investments over a single quarter. The drop from $7.78 billion to $3.90 billion demonstrated just how little interest there is in backing US companies.

High-risk EU Equity Funding Lures Outside Interest
If companies could finance themselves, high-risk funding wouldn’t even exist. Instead, business owners count on capital for start-up and expansion from such sources as business angels, venture capital, and stock markets that specialize in high growth companies. In the EU, the European Commission is strategizing to improve equity investments. The EUbusiness blog states that business funding from angel investors shows the most promise of the three types.

Business Funding Options to Consider
If you’re taking inventory of your business’ credit worthiness, allBusiness lists these small business loans options worth considering:

• Small Business Loans. Such as banks, credit unions, the U.S. Small Business Association, or angel investors
• Merchant Cash Advance. Based on potential credit card sales and typically requires a merchant agreement
• Unsecured Business Loans. Not secured against the borrowers assets and can have double-digit APRs

Considering how much money you need, how it will be spent, how long it will take to be repaid and “Plan B” are all indicators of the business funding type that will fit your organization.

Loans for Business: Is the ARC Making It's Farewell Tour?

The government’s ARC loan program has helped businesses across the nation get loans for business start-up and expansion. But it hasn’t been without its hitches--and now it may be on the way out. Here’s a quick look at the ARC loan program in its swan song.

What is ARC? Why Haven’t I Heard of It Before?
The Small Business Administration’s America’s Recovery Capital Loan Program provides up to $35,000 in short-term relief for small businesses that face immediate financial hardship. The money is intended to help business through the current uncertain economic times and begin the process of returning to profitability. Funds are delivered over six months and repayment begins twelve months after the last disbursement.

What Issues Have Affected ARC’s Success?
While the loan strategy is built on a promising concept, business owner’s in the trenches say that the loans for business are coming too little, too late. CNNMoney.com staff reporter Catherine Clifford reveals that big banks have been reluctant to participate. According to the Small Business Administration:

• The ARC loan program has backed 2,715 loans
• The total business loan amount equals just over $88 million
• The average commercial loan size is $32,425

Is ARC Sailing Away?
According to Sam Thacker, partner in Austin Texas based Business Finance Solutions and AllBusiness columnist, time is running out on several of the temporary SBA commercial loans programs. Many are scheduled to be phased out by December 31. For business getting in on the tail-end of the program, that just might be too late.