How Credit Card Factoring Works

If you are looking to put cash into your business but are worried that you won’t qualify for a small business loan from your local bank, then credit card factoring might be for you. Since the economic collapse of 2008, banks have been lending less often and in smaller overall amounts to clients. Requiring seemingly impossible to meet standards, many businesses including those that used to qualify for a term loan are no longer being offered a line of credit at least for the amount of money they are seeking. Along with it being more difficult to qualify for a term bank loan, it has also become extraordinarily arduous and time consuming to even apply for a small business loan let alone be offered one. Most business owners simply don’t have that much time on their hands to fill out so much paperwork.
How does credit card factoring work
So if you are seeking a new source of financing for your company that doesn’t come from a corporate bank, you have some company. In addition to factoring accounts receivables, credit card financing is a way businesses such as restaurants, retail stores or service companies can get cash quickly meet to cash flow demands or expand their business.

High Volume Credit Card Transactions Are a Good Fit for Credit Card Financing

Credit card receivables financing works by obtaining cash upfront from credit card factoring companies that is based on credit card sales in the future. The factoring company will make this estimation by reviewing the amount of sales generated by current and recent credit card purchases. This includes both amount and volume of purchases and does not require several large-value invoices the way typical accounts receivable factoring might.

Credit Card Receivables Factoring Offers Gradual Paybacks

Moreover, credit card factoring companies will use your monthly credit card sales and other metrics to assess whether or not to award you the cash you are seeking rather than a credit check. Once awarded the money, the company will be expected to pay it back gradually over a period of time. Alternatively, the company may collect a percentage of what it is owned from future credit card transactions so you are saved the hassle of having to make direct payments. What’s more this credit card receivables financing payback method allows you to feel the impact of the payment much less over time. It is also flexible so that if your credit card sales go down, so does your payback to the company.

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About the Author:

Robert Bernfeld started in the commercial finance industry in 1974. His early years included positions with Aetna Business Credit and Foothill Group. During the next thirty five years. Mr. Bernfeld established both equipment leasing and accounts receivable factoring companies.He partnered in founding Business Facilitators, Inc. in 1999. Mr Bernfeld graduated from the University of California, Riverside in 1974 and received his Juris Doctorate from Loyola University School of Law in 1977.

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