There are a number of methods to secure cash for your business, but not all of them involve a traditional loan. A merchant cash advance is actually a form of factoring. Factoring is a method whereby a business sells its anticipated credit card receipts to a factoring company - the factor - at a reduced price in exchange for working capital with which to fund the business quickly.

In today's economic climate it is no secret that a large number of new businesses are having a very tough time getting traditional business loans through a bank. The banks are extremely tight-fisted with their funds at the moment. Luckily business cash advances from factoring agreements are still available and the qualifications are much less tough than those located at the local bank.

To obtain a business cash advance, most factoring companies need a business to have been open for at least a year and processing credit cards for at least six months. Since repayment of the working capital is directly tied to credit and debit card receipts, proof of such income is also needed.

A portion of these future credit card receipts is agreed upon as the daily repayment capture, easing the financial hardship for the company in a slower period. Unlike a conventional small business loan, the daily capture feature allows business owners to pay back at their own pace instead of being liable for fixed monthly payments that could end up in the business going out of business.

Because this money is not attained in a normal loan, if the merchant fails to meet the requirements of the agreement, for example, using different credit card services to accept payments, they are still held personally liable for the amount left over.

Nevertheless, for many early businesses, this method of obtaining funds is still the best. Flexible repayment terms, fast access to necessary cash and easier acquisition of said financing, makes a merchant cash advance a smart option for many business owners.