Similar in nature to a small business loan, a business cash advance is funding a company receives for various, circumscribed purposes that will need to be repaid within a 6 to 8 month period depending on how much is received. Business cash advances are becoming more and more common as conventional banks are tightening their criteria for small business loans.

Unlike traditional bank loans, business advances don’t require perfect credit. In fact, if you were rejected by the banks and need access to money in a short amount of time, a business advance may be a perfect solution. As one would expect, the conditions placed upon such cash advance products generally include higher interest rates since the advance company is taking on a greater risk.

Some arrangements allow the borrower to attach the repayment schedule to income levels of the business. This is particularly useful to a small business owner that has significant variations in revenues from month to month. Payment is directly attached to credit card purchases, allowing for smaller payments during slow months. This feature is extremely useful to those businesses who are seasonal in nature because a fixed payment each month is not required.

Business advances are of particular use to those business owners who have not been in business for long. To get a conventional bank loan or a loan from the Small Business Association, a person may be asked to give proof of collateral, an extensive business history and a credit report with excellent scores. When one is just starting out in business, this may not be possible, especially in today’s economic climate.

Still, caution is advisable when applying for a business cash advance. It isn’t uncommon to find ballooning payment plans, application fees and a required switch to a specific credit card provider. Reading the fine print of any agreement is a must. For those business owners who find themselves in need of cash and have few other options available, the business advance can be particularly helpful as opposed to waiting months for a normal small business loan you probably will not get approved for.

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