The entire small business cash advance and factoring process, from application to receipt of an advance, usually takes several days. The application itself is the first step in this process. Many providers offer online applications that can be completed in less than an hour.
You’ll start by filling out the application with all the relevant information. The provider will request specific dollar amounts, so it’s a good idea to gather all documents before you sit down at the computer. You may need to submit documents or receipts via mail, or by scanning them and e-mailing. The length of the application and the information required will be different for every provider.
Once you submit the application, you’ll be contacted by the provider, either with an approval or with a request for more information. Most providers will contact you within a few days. Based on the information you provided, they will calculate a safe retrieval rate and an advance amount.
At this point, it’s a good idea to make sure that your current credit card processing system will be able to process the transfers. Since repayment is made daily directly from your merchant account, you’ll need to allow the provider access to the account and processing system to verify your daily sales. Some credit card service providers don’t allow third party access or transfer transactions. The only fix for this is to switch processors or choose a different advance provider. Either way, you should factor in the costs of switching to another merchant account provider if necessary.
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Once you’ve determined that the transfers can process easily, the cash advance provider runs a few test transactions to make sure the systems are compatible. During this stage, the provider will draft a contract specifying all terms of the advance. The contract should outline the repayment schedule, the daily retrieval rate, and any other relevant information. Make sure that you are aware of any hidden fees or charges for administrative or other costs. These aren’t typical of a cash advance transaction, and should raise some red flags about the provider.
Once the contract is signed, the provider arranges to have the advance transferred to your account. The entire process, from start to finish, usually takes under a week.
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