What is a Business Cash Advance?

A business cash advance allows you to borrow against your future Visa, MasterCard, American Express, or Discover sales rather than using your personal credit or collateral. A fixed percentage is deducted from your business' Visa, MasterCard, American Express or Discover sales receivables for repayment. All other revenue earned through cash, check or other cards are untouched. Repayment occurs automatically and follows your business revenue flow.

There are no bank loan repayment schedules, no fixed monthly payments, no fixed repayment time frames, and no penalties for late payments.

Also unlike traditional secured business loans, business cash advances require no collateral or personal liabilities.

Business Cash Advance benefits are:

• No Hassle, instant cash funding.
• Fast, easy and convenient cash advance approval process.
• No collateral or equity required like a small business loan.
• No upfront costs or hidden fees.
• Can potentially lower your credit card processing rate saving you money.

What's the difference between a secured business loan and an unsecured business cash advance?

A traditional small business loan requires a written loan proposal resulting in time-consuming work and funding delays. They involve strict monthly repayment schedules regardless of your monthly business revenue flow.

Also, small business loans are very difficult to attain from a bank when you need it the most - like during cash shortages - rather then when you are in profitable. Bankers focus on past credit history to determine the loan repayment program and assurance of the set monthly repayment is their prime concern while approving a loan. Therefore, the small business owner is typically required to personally guarantee the loan or secure the loan with collateral like the owner's home or other assets.

A business cash advance is funding provided against the monthly credit card sales volume to facilitate the instant availability of cash for a small business. And it does NOT require a personal guarantee or collateral.

How Is a Secured Loan Different From an Unsecured Loan?

When the need to borrow money arises, there are several choices to obtain the cash needed, including borrowing from family members, a cash advance on a credit card or a traditional loan from a bank or credit institution. Banks offer both secured and unsecured loans. It is important that borrowers understand the differences between secured loans and unsecured loans before signing any loan documentation. There are pros and cons to both types of loans.

Collateral

The main difference between a secured and unsecured loan is the collateralizing of the loan. With a secured loan, the bank will take possession of the title of the assets that are being used as collateral for the loan. This may include a home, car, investments or other assets that can be converted to cash. With an unsecured loan, there is no collateral provided for the loan. The bank does not gain access to any assets with an unsecured loan, which is generally lent on the strength of the borrower's good name and credit history.

Interest Rate

Because the bank is more at risk with an unsecured loan, the interest rates tend to be higher than with a secured loan. In some cases, the interest rates on an unsecured loan may be higher than that of your credit card. A typical unsecured loan will have a fixed interest rate. It is possible to have an unsecured line of credit, similar to a credit card, which will have a variable interest rate. Regardless, an unsecured loan’s interest rate will be higher than a secured loan where the bank has collateral to repossess if the borrower does not repay the loan.

Term

The term of an unsecured loan tends to be shorter than a secured loan. Again, this is to lessen the risk to the financial institution. Without collateral to mitigate the bank’s risk, the institution wants the money to be repaid as soon as possible. This same reasoning is also why unsecured loans are usually available in much lesser amounts than secured loans. Secured loans, particularly those secured with real estate, can have terms as long as 30 years.

Availability

Not everyone will qualify for an unsecured loan. Many banks will require an excellent credit score as well as an established relationship with the borrower before extending an unsecured loan. In fact, some banks refuse to lend money without collateral and will not even offer overdraft protection for a checking account unless it is tied to a savings account. With a secured loan, those with good credit will qualify and an existing relationship with that financial institution is usually not required.

Tax Implications

With a secured loan, it is possible to write-off the interest associated with the loan. This would hold true if the loan is secured with your primary home as collateral. However, you must also realize that you are putting your home at risk if you are unable to make the payments on the loan. With an unsecured loan, writing off the interest associated with the loan is not possible as it is not collateralized. However, you are also not risking your assets if you are unable to repay the loan.

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Unsecured Bank Loan.

An unsecured bank loan is a type of financing that is granted to a borrower without collateral. Collateral can be in the form of real estate, an automobile, jewelry or anything that the lender qualifies as security. An unsecured bank loan is often approved for a smaller amount compared to secured loans because the risk of default is higher on financial agreements that do not have collateral associated with them. They may have higher interest and fees associated with them because the lender is taking a risk since there is no way to guarantee the loan. The credit requirements may vary depending upon the lender. Different types of unsecured loans include a line of credit tied to one's checking account, personal loans, payday loans, and emergency cash advances. "Still others were saying, "We have had to borrow money to pay the king's tax on our fields and vineyards" (Nehemiah 5:4).

Credit requirements are often based upon the average of a borrower's credit scores. The three credit bureaus have a report and a score on every person who has ever applied for credit. Lenders will often take the middle score between the three as the one used to determine credit worthiness. Credit scores that are 620 or above are considered by most lenders to be satisfactory. However, some will approve credit for scores lower but usually have higher interest rates. Having a score in the 700's or above will more than likely result in the lowest interest rates. Approval for an unsecured bank loan may not be based solely on credit scores or financial history.

Lenders online require that the potential borrower fill out an online application. Most have a secure site to safeguard personal information. An unsecured bank loan requires that a person have a steady amount of income coming in every month. Online lenders often do business with customers by email so the borrower will need to have an email address. Personal information such as name, age, driver's license number, social security number, and bank information may be needed on an online application. A borrower may be required to furnish paycheck stubs and checking account information before being approved. Some lenders only grant online financing for those who reside in the state where the lending institution resides.

Financing options that could qualify as an unsecured bank loan include lines of credit tied to one's checking account. Line of credit loans tied to a checking account provide the borrower with funds deposited straight into his or her checking account. Transfers can be made in small increments with an established maximum balance. This type of financing can help a person to avoid overdraft fees. This may sound great but the funds do have to be paid back with interest. Some lenders online offer a fixed annual percentage rate on line of credit financing. A percentage of the checking account balance will be deducted by the lender as the monthly payment. Online applications are available on this type of loan and the needed information from the borrower includes name and address, current and previous employment information, monthly income amount, value of assets, outstanding debts, and any information on savings or investments.

Personal loans are often considered the same thing as an unsecured bank loan. Many sites online refer to them as payday loans and cash advances. In order to get cash advances or financing for personal use a person must make a certain amount of income each month. He or she must be able to prove that income with paycheck stubs, a profit and loss statement, or income tax records. This type of financing does not require collateral because the borrower's job serves as security to the agreement. However, a person must be willing to allow the lender to withdraw the money for the monthly payment each month straight from his or her checking account. A lender will provide the funds by making a deposit into the same checking account. Some banks and other lending institutions allow this type of loan to be reinstated as long as the payments are continuously paid on time each month. A borrower can go online and make a payment by accessing his or her account online.

Some companies on the Internet provide services to help individuals receive a competitive and secure loan. They can provide information on the lenders they do business with. In addition, they can provide some comparison's by interest rates so that the potential borrower can compare for the best options. Companies that supply information on several lenders get paid by the lenders and the customer is not under any obligation when using their services. Most sites provide contact information so that potential customers can send an email or call them with any concerns or questions. An unsecured bank loan is available through many lending institutions online and can be found by doing a search.

The things that many people look for in an unsecured bank loan is the ability to use the money how they please. Once the loan is processed the customer is under no obligation to supply the lender with a synopsis of how the money will be spent. Many people look for personal loans when in a pinch and need some extra cash. Oftentimes they may have an emergency that needs to be taken care of. Sometimes borrower's just need to get away on a vacation or they might need to pay off some debts that have high interest associated with them.

Difference between secured loan and unsecured loan.

Secured Loan The money lent via a 'secured loan' is secured against a property or other asset As most people who take out a secured loan already have a mortgage on their property, the original mortgage has what's called the 'first charge', ie when or if the property is sold the mortgage loan gets repaid first

• A secured loan will therefore normally always be 'second charge', ie it is secured on the value of the property after the mortgage has been repaid

The most important point to understand about secured borrowing is that if you default on the repayments, the lender will automatically have the right to apply to the Courts to repossess your home and sell it to recover the money owing to them.

Unsecured Loan

• With an unsecured loan, as its name suggests, there is no security offered as a guarantee to the lender
• As such, lenders view these loans as riskier than secured ones as they can't force an asset sale (usually of your property) to get money back
• Unsecured loans are therefore normally offered for smaller amounts of money of between £500 - £25,000 with a repayment period set at anywhere from 1-10 years
• Credit card debt and personal loans are good examples of unsecured loans

Summary

Borrowing money is fine as long as you can afford to pay it back and the accompanying interest rate is fair. As a rule of thumb it's far better to borrow via an unsecured loan and it's even better to steer clear of the 'debt consolidation' companies that you see advertising on cable TV.

The problem with these companies is that -

The loans offered are only ever secured on your property which means if you default on the loan there's a good chance your home will be repossessed The interest rates are often extremely high, especially if you have a default or CCJ (County Court Judgment) against your name The loan period is often too long in the 10-20 year range. This means your monthly payments will be lower but the total amount of interest paid over the lifetime of the loan can be absolutely huge The loans themselves are often extremely restrictive, ie in most cases you are unable to pay them off early if you are able to due to expensive early repayment charges

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