Restructure your Business Debt

Meet your capital needs with a Merchant Cash Advance


Since partnering with First American Merchant, we’ve seen first-hand the disastrous impact an unexpected slowdown in cash flow can have on small businesses. The cash flow lag can come from normal volatility, sales shortfalls, seasonality, or any number of factors. Whatever the reason, the one thing that never changes for the business owner is that bills still need to be paid. The alternatives are all dire—collections, damage to their credit rating, even bankruptcy.

Unexpected cash flow slow-downs can have terrible consequences for your business. But it is possible to restructure your debt without access to traditional lending sources.

Banks are not rushing to offer traditional loans. Instead they point small businesses to high interest credit card accounts; the kind of credit that is useful for purchasing office supplies and paying for dinner, but not ideal for paying your lease. These short term instruments are quickly maxed out, and leave the owner carrying high-interest debt, which only compounds the cash flow problem. If your business is in a similar situation you need to restructure your short-term debt. But without help from your bank, where do you turn?

Restructuring options

In an effort to continue to make timely payments to their creditors many business owners begin to look for creative solutions. If you need to find creative ways to restructure your business debt here are several options open to you.

Negotiate with suppliers

Many owners never consider approaching vendors to talk about business issues and look for a creative solution. They see vendor terms as fixed, but in many cases good suppliers are like partners in your business. A good supplier should see that it is in their best interest to help you keep your business open. In light of that, they may be willing to lower costs and spread them out over a longer term; or they may be willing to waive or reduce late fees or interest penalties. If you can engage your vendors as true partners you can apply the negotiated savings against your highest interest debts.

Cut costs

Rework your budget and seek to eliminate all non-essential costs. Consider staff reductions, marketing expenses, entertainment, travel, and more. Seek to move as many costs as possible from the fixed category, to variable. Perhaps move to seasonal or part-time staff instead of fixed cost full-time or salaried employees. Rent or lease equipment rather than buying. The money that you save should be used to pay down your debt, starting with the highest interest items first.

Alternative financing options

You can also seek to consolidate short-term loans like credit card debt into longer-term debt with lower monthly payments. There are several types of alternative financing available, including: peer-to-peer lending, not-for-profit small business loans, crowd-funding, and merchant cash advances.

Merchant cash advance

A merchant cash advance can give you the funds you need today to boost capital. It enables you to pay off creditors, consolidate short-term credit or invest in growth opportunities. A merchant cash advance is not a loan, it’s a sales transaction in which a company buys your future credit card receipts at a discount agreed upon by both parties. You receive funds today, and you repay the advance out of daily credit card sales.

If you already have a merchant credit card processing account you can be approved online fairly quickly. No need for financial statements, tax returns, credit reports or all the other documentation required by banks. The processor will just confirm that you have a suitable volume of credit card sales.

Repayment matches cash flow

A merchant cash advance repayment is not a fixed monthly cost. Instead, it is repaid out of a percentage of your daily credit card sales. That’s useful if your business has high volatility because your repayment is tied to your cash flow. In months with low revenue, your payments will be correspondingly lower. You can take advantage of merchant cash advances to even out seasonality or cash flow volatility, bridging you from slow cash flow months to more profitable periods. You can use the capital generated by a merchant cash advance to pay down the existing debts that were a drag on your business, confident that the variable monthly payments won’t affect profitability.

Unexpected cash flow slow-downs can have terrible consequences for your business, but it is possible to restructure your debt without access to traditional lending sources. You can cut costs, renegotiate with suppliers and explore alternative financing options. Merchant cash advances are tailor-made for those struggling to find capital to service monthly debt. They allow you to consolidate short-term debt into lower monthly payments over the long term. Following these proven strategies for restructuring debt in the absence of traditional financing can help you avoid collections or even bankruptcy.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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