Oftentimes short term options for commercial business loans are overlooked. As a result of the adverse impact the downturn economy has on businesses, all working capital financing strategies need to be evaluated thoroughly.
Short term commercial business loan are frequently not properly considered as a result of misunderstandings about long term commercial business financing. There are practical short term business financing options that can be more profitable and workable for business owners who need commercial business loans, although long term commercial real estate financing options are frequently considered appropriate.
Usually, commercial real estate loan programs, credit card processing programs, and short term merchant cash advances are the most critical short term commercial financing strategies. These working capital financing strategies are oftentimes confused by business owners.
A business cash advance that uses credit card processing to obtain financing for their business is one of the commercial financing strategies that isn’t much used for businesses. Usually, businesses that accept credit cards as one way for customer payment known as credit card financing is one effective financing tool that is sometimes overlooked by businesses.
The most probable candidates that would benefit from a working capital cash management strategy are retail stores, restaurants, and service businesses. One financial strategy uses receivables and credit card sales in order to obtain business cash advances that are based upon sales volume. Credit card factoring is another name for this working capital financing strategy. There are even some business owners that have used credit card factoring or receivables to sell their future receivables at a discount.
However, in order to receive a commercial business loan not all retail and service businesses can document their business receivables. Usually businesses that include restaurants and bars don’t have receivables that can be used to finance a business. However, in many cases, these businesses do have documented sales activity. The working capital management strategy and financial asset to the business is the documented level of credit card sales activity. Based on the business’s future sales and current sales volume, business cash advances can be between $5,000 and $300,000.
Usually, the repayment requirement for this type of commercial financing is less than 12 months. For those businesses that need a business cash advance for a longer period of time, this arrangement can be renewed.
Usually, not all business financing sources will always be successful at executing the credit card processing and financing. Choosing an effective financial source is necessary to an appropriate business cash advance program because there are some problems in avoiding a working capital advance.
For businesses that own commercial property, a long term commercial mortgage might be appropriate. Usually, both long term and short term funding should be used to finance business properties. It is more desirable to obtain long term business financing of 30 years whenever a longer term commercial real estate loan is feasible.
However, longer term commercial financing isn’t appropriate for business owners in many commercial mortgage loan circumstances. Business owners need to realize that there are feasible short term working capital strategies in these circumstances.
