CIT Bankruptcy Could Seriously Disrupt Retail Business Financing

Retail business financing has been rocked in the past two weeks, with news that major retail financer CIT is working to avoid bankruptcy. A bankruptcy at CIT would disrupt funding for retailers and small businesses just as these organizations are getting ready to go into the holiday shopping season. CIT is one of the nation’s largest factoring services. Factoring allows vendors to their accounts receivable for cash up front, guaranteeing that the vendor will get paid for its goods. CIT figures prominently into the vendor’s ability to get goods into stores in a timely way.

Who would be hurt by a CIT bankruptcy? Just about everyone, from giants like Walmart and Target to small retailers and restaurants. Even for vendors that don’t use CIT’s services, a bankruptcy would have a chilling effect as vendors may demand up-front payments for goods shipped to retailers, restaurants and other small businesses.

A business loan alternative known as a merchant cash advance puts the power of factoring directly to work for retailers. With a merchant cash advance, a business owner can sell a portion of his future credit card transactions to a factor, like Rapid Capital Funding. The cash can be used for anything – including paying for inventory. The business loan alternative is repaid as the sales come in. A portion of each transaction is used to repay the merchant cash advance, and the rest is returned to the retailer.

Should the unthinkable happen – a bankruptcy at CIT – merchants who seek out a merchant cash advance will still have the ability to pay for their holiday inventory. A merchant cash advance can be arranged in a matter of hours, and doesn’t rely on the credit rating of the retailer. Good credit, bad credit or no credit, your store shelves will still be full during the holiday season, thanks to a merchant cash advance business loan alternative from Rapid Capital Funding.

Photo Credit: Jason Kuffer, via Flickr

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