Merchant Cash Advance – Avoid Fraud With These Tips
Oct 5, 2010 Commercial Loans
Merchant cash advance (MCA) offers you a quick and easy way to procure funds for small and middle-sized businesses, in exchange for a portion of your credit card receipts. Since merchant cash advance is considered a purchase, rather than a loan, it is not bound by financial regulations and is outside the purview of financial regulators. With the MCA industry set to cross the $10 billion mark, a number of unscrupulous providers have entered the industry to enjoy a share of the profits. To maintain the integrity of the industry and guard you against financial malpractices, major MCA companies have collectively formed the North American Merchant Advance Association (NAMAA).
NAMAA has issued the following guidelines to enable you to segregate genuine providers from fraudulent ones, and retrieve maximum benefit from MCA funding:
Inappropriate Terminology
Guard yourself against inappropriate or complex terminology in merchant cash advance contracts. According to NAMAA, beware of MCA providers who use the term “loan” to refer to your financial transaction or issue contracts that involve personal guarantees. Make sure that you understand every term in your contract and its implications. This is even more important when you are dealing with a provider who sells a host of other financial products in addition to MCA.
Risk Management Processes
Experienced and reputable MCA providers rely on underwriting process to analyze the risk involved in your financial transaction. For this, legitimate providers will ask you for two pieces of information – number of months you have been in business and your monthly credit card statements. You do not have to provide your financial statements, tax returns or other asset documentation to receive the funds. Even though the funding is fast and you will receive MCA funds within a week, be wary of providers who are willing to offer funds to you without collecting the necessary application details about your business performance.
Collection Tactics
Merchant Cash Advance industry has created a set of standards to define acceptable conduct and collection tactics. To make your MCA transaction beneficial and profitable, a set of appropriate collection rates have also been defined. Inquire about these rates before signing the contract.
Fixed Retrieval Rates
In a merchant cash advance transaction, repayment amount is a fixed percentage of revenue. In periods of low revenue, you pay small amounts and when times are good you pay bigger amounts based on agreed upon fixed percentage. To guard against fraudulent providers, MCA providers are forbidden from including steep rate increases in your contract or retaining the right to change the payment percentage at will. Make sure your retrieval percentage is clearly stated in your contract and that the same cannot be changed without your written consent.
Tags: Commercial Loans
Government Business Grants – Three Different Sources of Business Grants
Aug 1, 2009 Commercial Loans
Are you on the look of where to find sources for your capital of your up and coming business? Then, most likely you already seek for help from different people such as your friends, colleagues, and workmates. Or worst you will go to a bank and apply for a loan. However, with the economic situation today, banks and other financial institutions will be quite hesitant to let you borrow money when times are tough.
This is the reason why applying for business grants would be a great help for you. It is considered as one of the most competitive grant that you can avail of from the government. There are thousands and thousands of businessmen who would want to get a business grant from the government. The competition out there is quite high. Government business grants are approved on the basis of these criteria: type of business, geographical location and where or not such business can add to the economic growth of the country.
For government business grants there are about three sources. First, the official website of the government grants. This is where any beginner should look into first. This is where you can see the list of different programs available from the 26 federal agencies that are responsible for distributing grants to the people. Second, is through the Catalogue of Federal Domestic Assistance or CFDA. This provides a list of different business grants and types of financial aid.
Third, you can do your search through the Internet regarding government’s free loans and grants. There is a word of caution regarding this third source, since this is subject to a lot of fraud cases and most likely from people who promise to give free money to the victim, usually this is a paid service. Therefore, before you even think of shelling out your money, you should be sure you do not fall into the hands of these scammers.
Tags: Commercial Loans
