Seller Financed Note Holders


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Seller Financed Note Holders

Seller Financed Note Holders

A previous article, How to Finance a Small Business, offered a few traditional and popular options for small business owners seeking loans or financing to improve cash flow. The following methods of finance either draw on business-based assets or take advantage of business-based relationships:

Accounts Receivables Financing

Accounts receivables financing is an asset-based financing arrangement in which a company uses its outstanding invoices as collateral for short-term financing. A company can either choose to finance their accounts receivables or factor them. In the first option, the lender offers a short-term loan against the outstanding invoices, but the lender does not own the invoice and does not assume responsibility for collecting the outstanding debt. With accounts receivables factoring, the lender assumes responsibility for collecting the outstanding receivables from your customers.

Business Cash Advances

A business cash advance is a form of receivables financing that is based on future credit card sales. The cash advance company purchases a portion of these credit card transactions from the business at a discount. The business then receives an instant lump sum of capital, while the financing company collects a fixed daily percentage of the business' credit card sales until the full agreed upon amount is paid off. While the interest rates for this form of financing tend to be a bit high, the approval process is relatively quick and easy and there are few requirements for funding.