A business cash advance is a financing tool based on future sales that can help small businesses improve their cash flow. With a cash advance, the commercial financier purchases the business’ future credit card transactions at a discount and in exchange provides the small business with a quick source of capital that can be used to consolidate debt, invest in an expansion opportunity, or to cover operating costs when sales are down.

Since this form of funding is based on future sales, there are fewer requirements to be approved. Even small businesses with a poor credit rating or sales history can generally qualify for a cash advance.

Moreover, since repayment is based on sales volume, it follows the flow of the business. This means when sales are slow, then the payment is accordingly reduced.

To determine if a business cash advance would be appropiate for your business, here are a few of its pros and cons:

Pros

• No lengthy business proposal or financial statements are needed to get approved.

• Funding is based on future sales so those with poor credit or sales history can still qualify

• Quick approval process

• No collateral needed to secure the loan

• No need to worry about making payments when sales are down

Cons

• Not available to start-ups

• Must process significant amount of credit card sales

some of the content in this section about business cash advances has been provided by First American.