Merchant Loan, Loans, Loan, Business Loan, Advance Finance, Advance, Cash Lending, Restaurants, Rest Released by: Cambridge Merchant Capital Group Web Site: http://www.cambridgemcg.com Why is it that a Merchant will pay the equivalent of 90% - 150% APR? Email: info@npsse.com Keywords: Merchant Loans, Loans, Loan, Lending, Business Loans, SBA Loans, Merchant Advance, credit Cards, Update Date: 11/22/2006 12:23:42 PM Hits: 166 Descrption:  Why is it that a Merchant will pay the equivalent of 90% - 150% APR for working capital, when there are options that are just as fast that will cost between $0.05 - $0.12 on the dollar? It is shocking that a restaurant that borrows $100,000 will pay $35,000 for it over a period of 6 months. There are funding companies out there that cannot find merchants to lend their money too, that charge one fifth (20%) of the cost that these merchant advance companies charge. Yet still, merchants will flock to these companies that charge ridiculously high amounts of money to fund them. There are several reasons that this is taking place. 1. These Merchants don’t believe that they could be funded because of their credit history or lack of security. 2. These Merchants don’t believe that they could be funded in the same amount of time that these merchant advance companies can fund them. 3. These Merchant believe that the underwriting process will be too difficult for them, and in some way is stricter than these merchant advance companies. 4. These merchants believe that because some of the merchants advance companies don’t report on their credit that this will in some way help their credit. 5. These Merchant are hypnotized by a sales person who pretends to be their friend so that they can receive a very healthy brokerage fee from the merchant advance company at the expense of the hard working business owner who is just trying to get some working capital. All of the above mentioned reasons are all false beliefs. The funding process is just as simple, and approval guidelines are based on cash flow which makes the process virtually as fast and easy. Some of the funding companies out there are actually licensed lenders, therefore legally cannot charge above a certain rate for financing. A merchant should stick to seeking financing from a licensed lender so that the Banking Regulators can protect them as a consumer from being over charged. The other type of financing operates by buying the future receivables from merchants, much like your common factoring scenario. This type of transaction is not regulated under state and federal usury laws and allows these companies to charge basically what ever they can get the merchant to agree to, while still allowing the merchant to remain in business. This type of financing is not a solution. A merchant should not borrow money at a rate above that of their profit margin. That could only be a negative decision for the business and its dependents. On a random test poll of 100 merchants we found that over 35% of the merchants that had taken finding from merchant advance companies that charge the equivalent to $0.35 on the Dollar over a period of six months went out of business within a year of trapping themselves in to the repetitive funding cycle. The other 65% of the businesses that survived, didn’t really need the money to begin with and borrowed the money for luxuries. Either way we found that businesses were loosing an average of $300-$3,000 per week in the difference in cost of finance between the two. For a small restaurant $300 a week is the cost of an employee. Please contact Cambridge Merchant Capital Group to find out how you can get funding at reasonable costs, or convert your working capital debt over to a group that is government regulated. Toll Free 1-800-708-9895 If the reader of this is not a business owner, please forward the article to someone who is. Contact infomation: Phone: 1-800-708-9895 Website: http://www.cambridgemcg.com