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Frequently Asked Lending Questions

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FMA: Putting your Business First
What are the amounts and terms of a Business Cash Advance?

First Merchant Access offers access to Business Cash Advances ranging from $2,500 – $1M, with terms between 3 – 24months.

Is a merchant cash advance exactly the same as business cash advance?

No. A true business cash advance has fixed terms and payments, which are typically up to 50% less expensive than a merchant cash advance. Additionally, a business cash advance can report your payment history to the credit agencies, whereas there are no credit benefits to using a merchant cash advance.

What can I use my working capital for?

Many small businesses use a business cash advance for purchasing inventory, equipment, launching a marketing campaign, hiring additional employees or even general working capital.

How are business cash advances repaid?

A business cash advance uses daily or weekly ACH payments which are made directly from your business bank account. These fixed payments are proven to prevent the snowball effect often caused by missing larger monthly payments.

What industries can qualify for a business cash advance?

First Merchant Access works with over 250 different kinds of businesses. We specialize in helping businesses gain access to business cash advances. Businesses like restaurants, auto repair shops, retailers, doctors, beauty salons, HVAC contractors and many other service providers can all greatly benefit from our services. Allow us the opportunity to connect you with an alternative lender that can assess your business within minutes. First Merchant Access has assisted businesses for years, and for every time we’ve heard someone say “banks aren’t lending,” we know a hundred businesses that got funded by a non-bank lender. There are lenders that want to help you grow.

How much can I get from a merchant cash advance?

The amount you get from a merchant cash advance depends on how much in credit or debit card sales you process each month. The bigger you are, the larger the available advance. Some business cash advances reportedly go as high as $1 million, but typical arrangements are for less than $200,000.

How long does it take?

From the time you apply for a merchant cash advance, it takes less than a week, sometimes less than 48 hours, for you to get the cash, assuming you’re approved.

What do I have to put up for collateral?

Merchant cash advances aren’t loans, so you don’t have to put up any collateral. Instead you agree to sell a portion of your future receivables in exchange for the cash advance.

How long must I be in business to get a merchant cash advance?

Requirements vary among business cash advance providers, but you must show a healthy track record of debit and credit card transactions for at least a few months.

What are the downsides?

Merchant cash advances tend to be more expensive than bank loans and traditional credit lines.

What if my business fails and I haven’t paid back the merchant cash advance?

You have no obligation to repay the cash advance if your business fails. When purchasing your future receivables, the provider assumes the risk that you could go out of business. But you must follow the terms of the contract. For instance, you can’t encourage customers to pay with cash instead of credit.

How is accounts receivable funding different than a bank loan?

During the application and approval process, we focus on the creditworthiness of your customers, while banks focus on your company’s financial history and cash flow. Accounts receivable funding is not a loan; therefore no debt is entered on your company’s balance sheet. We can make a quick funding decision, while banks may take weeks-even months-to approve a loan.

How are the rates determined?

We take into consideration many variables, some of which include your sales volume, your customers’ credit strength, trends in customer payment cycles, invoice amounts, and the current climate of your industry.

Will my customers know that I have factored their invoices?

Although factoring has become quite common and many customers have probably sent payment to factors before, we are virtually transparent. We understand that customers are the most valuable key to business. We intend for you to maintain your customer relationships, so the way we communicate with them is respectfully designed to protect your good will.

Here is how this process works:

  • First, you send your invoice directly to your customer, just as you do now.
  • You also send a copy of that invoice to us.
  • Then, a letter introducing us to your customers is sent on your letterhead.
  • As your new Accounts Receivable Management Company, we confirm the invoice with your customer on your behalf.
  • Your customer will be asked to send your check to a remittance address, which is our bank lockbox.

What if my customer doesn’t pay their invoice?

If an invoice is unpaid beyond 90 days, you have a few options. You can choose to swap out that invoice in exchange for a new one or you can simply buy it back.

What if a lender already has rights to my accounts receivable as collateral?

We have many years of experience working with other financial institutions. Since we must hold the rights to the asset we are purchasing, we are usually able to arrange a subordination agreement or negotiate the release of any liens that may be encumbering your receivables.

What is Purchase Order Funding?

Purchase Order Funding is short-term financing, payment, or payment assurance made to a supplier on behalf of a buyer to procure or produce and deliver goods that has been pre-sold.

How does P.O. Funding work?

If you have an order from a customer but lack the financial resources to fulfill it, you can request and receive advance funding on the order and repay with proceeds from the sale after completion or delivery.

What do you charge for P.O. funding?

Every transaction is unique therefore, the real cost of P.O. funding will depend on the specific and associated terms and conditions of the P.O. The average cost of purchase order funding is about 2%-5% of funds used, not including ancillary costs.

What is the minimum and maximum amount you will fund?

We will consider purchase order funding requests between $10,000 and $10MM.

Will you fund an entire project or only a portion?

We will fund 100% costs of goods or up to 70% value of P.O. towards the production of goods only. We will not fund soft cost such as labor except in rare cases.