Small Business Cash Flow Hurt By Credit Markets

About 50% of all small businesses depend upon their credit cards for short-term financing. Until recently, the system worked well for small business owners who needed to float loans for a little while. In the past several months, however, credit card interest rates have doubled and in some cases tripled. In addition, small business owners are finding that their credit lines have been cut. In all, nearly $3 trillion have been removed from the “available credit” market.

For some small business owners who depend on the cards, these changes can cause cash flow problems. Rapid Capital Funding offers small business owners another way to get the cash they need for their businesses. A merchant cash advance enables you to turn your future credit card transactions into cash right now.

If your business accepts Visa or MasterCard, is registered in the United States and generates $2,500 or more in credit or debit transactions each month, you may qualify for a merchant cash advance. With a merchant cash advance, you receive money for your future credit card transactions. As those transactions come in, a small percentage is diverted to repay your cash advance.

This gives your business the flexibility to get cash when you need it, without a long waiting or approval process, monthly repayments, collateral or personal guarantees. Think of this as a “cash-on-demand” option for your business. We have special financing plans for restaurants, too!

Most applications are processed and funded within three days. You won’t get that kind of response from a bank! If your small business needs cash and your bank isn’t talking to you, contact Rapid Capital Funding today and let us show you how to put credit cards back to work for you!

Photo Credit: Steve Woods

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Merchant Cash Advance Could Cure Stimulus Cash Flow Problems

If you think a merchant cash advance isn’t for you, hold that thought. The long-awaited stimulus plan has been presented and passed by Congress. The American Recovery and Reinvestment Act of 2009 may hold some nasty cash flow surprises for small businesses however. The package sets aside nearly $25 billion to subsidize health care premiums for recently discharged workers. The new law calls for a 65% subsidy in COBRA payments, but the actual cash comes from the employers themselves.

Under the new law, employers can deduct the 65% premium from their federal payroll tax deposits, but the up-front cash comes from the employers themselves. If you’ve recently laid off employees, or plan to do so in the near future, and those employees have health care benefits, you could be fronting the COBRA subsidy for your employees. Further, if the COBRA subsidy exceeds your payroll deposit, you’ll need to request reimbursement from the Treasury Department. You guessed it: the reimbursement policy is not yet in place.

Health care premiums are expensive, and COBRA payments for separated employees could cost your business thousands of dollars each month. If you experience a sudden cash flow problem, how will you pay your monthly COBRA payments?

A merchant cash advance can give you the cash you need to cover COBRA payments, payroll taxes or unexpected expenses related to your business. And a merchant cash advance is fast, too. Rapid Capital Funding can arrange a merchant cash advance in a matter of days. With a bank you could wait weeks or months for loan funds.

In a recession, the difference between survival and failure is cash. If your business doesn’t have the cash it needs, contact Rapid Capital Funding today and let us show you how we can help.

Photo Credit: Wojciech Wolak

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Small Businesses In Greater Danger Of Fraud

Tough economic times mean an increase in fraud against small businesses, which frequently lack rigid accounting controls. Earlier this month, a former financial manager of the Ann Arbor Amateur Hockey Association was charged with embezzling more than $937,000 from the organization, which had been stockpiling money to build a new ice arena.

The theft was discovered by bank officials, who informed the association of the suspected fraud. Kimberly Knight is accused of transferring the money from the association’s account to one of several personal accounts she had opened in her maiden name. The money was spent on lavish gifts, vacations, a luxury SUV and to help support a failing family construction business.

The organization’s experience is typical of small businesses that have been the victim of internal fraud. Often, the business is unaware of the theft and may even close in a downturn, never realizing that fraud, and not the economy, is responsible for their failure.

In the case of the AAAHA, the money that was stolen was intended to build a new facility, not to fund the club’s operations. No employees have been laid off as the result of the theft and the organization’s overall finances are still sound.

Many small businesses find out too late, however, that their operating cash has been taken, and must make the difficult decision to close. Even when no fraud is involved, sometimes cash flow is a problem, especially in a recession. Recovering from such an event or making up cash shortages can be very difficult, but temporary cash flow problems can often be addressed with a merchant cash advance. A merchant cash advance is the ideal solution for businesses that need cash fast, for whatever reason.

With a merchant cash advance, you can use your future credit card sales to put cash in your bank account right now. If your US-based business accepts Visa or MasterCard, and has at least $2,500 in credit card transactions each month, your business will likely qualify for a merchant cash advance. There are no questions to answer about how you plan to spend the money, and applying for a cash advance is simple. Even businesses with less than perfect credit can get cash fast, often within 72 hours.

Don’t wait! Address your cash needs now with a merchant cash advance from Rapid Capital Funding!

Photo Credit: Cameron H.

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