Business Cash Advances – Obtaining working capital is quick and easy when you get small business loans like Merchant Cash Advances from Stellar Business Funding. Learn about cash advances, how they work, and what to watch out for with deceptive fees and sales tactics. Here are the requirements and features of our advances:

  • Loans of $3000 – $2,000,000 funded at factor rates of 1.12 – 1.29.
  • Must average $4000/month in credit card sales and be in business 30 days.
  • Funding up to 125% of credit card sales within 3 – 5 business days, approvals with completed documentation usually issued within 24 hours.
  • Simple application process goes directly to underwriting, with no middlemen so we can offer lower costs.
  • Choice of options with each application, renewals and draws funded overnight.
  • Flexible Draw Programs where you take only the cash you need, when you need it, and become eligible for more funds if you take less than your approval amount.
  • Renew or Add On to your funding once you have reduced your balance by 40% and your business remains in good standing

Many of our clients renew at least once, if not many times over. Used in a proper manner, business cash advances are an affordable way to get funding to maintain and expand your business.

  • When should you get business cash advances? If your business is running well and you need to expand or invest in new products, equipment, or systems; you need fast and sudden production to fill a new or large contract; or you need funds to increase income and or sales.
  • When should you NOT get cash advances? If you don’t have a definite plan for how you’re going to use the funds, your business isn’t profitable yet, or your business is already failing.

How Business Cash Advances Work

Also called Merchant Cash Advances, Business Cash Advances are not loans. Rather, they are a way to get cash today at a reasonable cost, based on the discounted sale of your future credit card sales.

In this case, “discount” means a “factor rate”, or “cents on the dollar”. Factor rates for business cash advances run from 1.15 – 1.40 ………. in other words, 15% – 40% of the advance amount.

Cash advance amounts are agreed upon upfront and can’t be changed. For example, if you receive an advance of $10,000 with a factor of 1.16, or 16%, your payback amount will be $11,600. Terms typically run 6 – 18 months.

Typically, the maximum amount you can receive as an advance is 125% of your monthly credit card sales. As an example, if you do $20,000 in monthly credit card sales, you’ll receive a maximum approved offer of $25,000.

To get an initial approval, send us a completed application, your latest 3 – 6 months of bank statements, latest 3 – 6 months of credit card processing statements, and proof of business ownership with either a K-1, Operating Agreement, or Articles of Incorporation. Seasonal businesses need to send us 12 months of bank statements.

Repayment is made by taking an agreed upon percentage between 5-15% of your daily credit card sales, called a holdback, and sending it to us with a method called Split Funding.

That’s where your credit card processor splits funds and delivers the holdback to us. Businesses love this kind of effective way to repay because it’s based on a percentage, so a lower amount is paid on slower business days. For example, you have $3000 in sales one day, with $2000 in cash, check, and American Express sales, which you keep. Then you also have $1000 in credit card sales from MasterCard, Visa, and Discover, which we would calculate our holdback from. With a holdback of 10%, we would keep $100, and you would keep $900.

Contact Us about these brand new programs for Business Cash Advances:

  • The first program doesn’t require credit card sales.
  • The second program will qualify you in minutes, approve you in 1 hour, and then fund you in 24 hours with up to 50% of your monthly credit card sales.
  • The third program is if you have 2-4 outstanding advances from different lenders and need more capital. As long as you bring in enough revenue, we are able to restructure your advances by paying them down on a weekly basis, and then transfer your additional funds to your bank upon closing. We may require extra documentation.

Fees and Sales Tactics

Because there is no legal limit on how much that can be charged, some lenders resort to deceptive means to try to get your business. They don’t disclose everything, and the next thing you know is that you’re slapped with hidden fees and unforeseen costs.

At Stellar, we believe in being upfront and honest ……… after all, a large part of our business is servicing repeat and referral customers. We do not charge for applying or approvals, nor do we practice Double Factoring, Fee Stacking, Incomplete Disclosure, or High Pressure Tactics for our business cash advances.

Double Factoring

Since approximately 90% of businesses that get a cash advance will renew it before it’s paid in full, Double Factoring is something you will need to watch out for. When you get your initial cash advance, a factor is applied to calculate the payback amount. If you renew, the factor should not be applied again. If it is applied to the new amount, you are paying DOUBLE for the existing balance.

As an example, you are initially advanced $8000 with a repayment of $10,000 …….. that’s a payback of $2000 on the $8000. Let’s say that after you’ve paid back $4000, you ask for a renewal of funding back to $8000. If the lender offers the payback at $10,000 you’d be paying too much! That would be a payback of $2000 on the new amount of $4000.

To avoid getting hit, get it in writing that your lender will not practice Double Factoring BEFORE you get your cash advance. Often, all you have to do is send them an email when you renew that the factor cost of your renewal only applies to the new funds you’re requesting, and then they’ll realize they can’t pull a fast one on you.

Fee Stacking

This usually happens when you deal with brokers. When brokers bring business to lenders, they receive a commission. What happens with Fee Stacking is when brokers not only receive a commission, but they also charge you an extra fee by taking it off the top of your advance or debiting it from your account before your funds are paid out, and before you realize it.

To avoid Fee Stacking, never sign a form authorizing anyone to debit your bank account. This is a type of hidden fee, usually lost in the middle of a lengthy agreement.

Incomplete Disclosure

The best defense against Incomplete Disclosure is to become informed …… read and research about cash advances so you know what to ask and what to look for. Be aware that some lenders use comparison to show that they have a better deal than their competitors, when it actually isn’t because they charge an origination or a processing fee that is tacked on after the payback amount.

For example, you receive 2 offers for a cash advance of $10,000. One lender has a total payback amount of $12,000 at a factor of 1.20, and the other has a total payback amount of $11,850 with a factor of 1.185. If there’s a fee on the lower deal, we’ll say 3% added on, you’ll only receive $9700 on your $10,000, with an actual factor of 1.215 …… now that deal doesn’t sound so good.

Again, check the fine print, ask questions, and get everything in writing.

High Pressure Tactics

Constant emails, texts, phone calls, and pressure to close your business cash advance are not acceptable, nor necessary. Take your time to make any decision, and don’t fall for lines that tell you the offer is only good for that day.

Don’t use any lender who won’t explain their contract to you or answer your questions. If you have a contract that you don’t understand, let us review it and we’ll let you know if we see anything we don’t like.


The Stellar Advantage

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