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Proceed With Caution

Used properly, a business / merchant cash advance can provide your business with cash today at a reasonable cost to help expand and grow your business. They can be an excellent alternative to other types of financing.


There is no legal limit on how much you can be charged to receive funding.

And it’s not always easy to understand the costs involved. Fees can be hidden and future costs can be unseen, undisclosed, and even intentionally hidden from you.

The Business Cash Advance industry has many high quality and ethical companies providing hundreds of thousands of small to medium sized business the cash they need to be successful. However, there are some questionable practices that all businesses shopping for advances should be aware of:


Double Factoring

Almost 90% of all business that take out a cash advance will renew their existing advance before the balance is paid in full. Double factoring is the practice of applying the factor cost of the renewal to the existing balance. The existing balance already includes the factor rate of the initial advance so you are being charged twice for the same money. Here's an example:

Initial advance of $10k with a $12k payback. When the balance reaches $5k, the funder offers a renewal back to $10k with a $12k payback.

If this renewal is accepted the cost of the new funds is DOUBLE what was charged originally. In this example the business paid $2k to receive $5k in new funds. This equals a 100% increase in cost of funds.

It imperative to make sure that a cash advance provider does not participate in this practice BEFORE you take out the initial advance. Get it in writing. A simple e-mail stating that the factor cost on renewals only applies to the new funds being disbursed.

SBA Capital does not participate in this practice on any business cash advance that we fund directly.


Fee Stacking

This most commonly occurs when dealing with brokers. Brokers get paid commissions by funders to bring them business. That is totally fair and reasonable. However, there are brokers out there who will receive a commission from a lender AND charge an additional fee that they will take off the top of the funded amount or worse, debit it from your bank account before the funds are even disbursed.

Authorization to debit the fees in advance are typically undisclosed and hidden in the middle of a long and wordy agreement. Never sign a form that authorizes anyone to debit your bank account for any reason.

SBA Capital does not charge any fees in advance for any business cash advance transaction nor do we deduct any fees from the approved amount on the day of funding.

Incomplete Disclosure

This can come in many forms but being aware of what to look for and what questions to ask can save you thousands of dollars and help assure you that you are getting a fair deal.

The true cost of funds isn't always what it seems. Even when comparing offers there are practices that can mask the true cost and make an offer look better than another when the opposite is really what's happening.

Lender origination or processing fees that are netted from the funded amount can change what appears to be a better deal into a worse deal.

Here's an example:

You receive competing offers for $10k. One has a total repay of $12,000 and the other has a total repay of $11,850.

It's easy to choose the lower cost but nobody discoled to you that that offer came with a 3% origination fee so on the day of funding you only receive $9,700 of what you thought was going to be $10k. This fee is often in the fine print of the contract but nobody disclosed it to you in advance.

Now the comparison has changed. What seemed to be a better deal with a factor rate of 1.185 vs. 1.20 is now 1.22. Receiving $9,700 in exchange for paying back $11,850 reflects a cost of 22 cents on the dollar even though it initially appeared better than the offer that was 20 cents on the dollar.

When comparing offers it is very important to understand all the costs and fees associated with the transaction. Ask questions and get everything in writing.

SBA Capital does not deduct any origination or processing fees in association with its business cash advance program. The funded amount and cost of funds will be clearly stated on the approval.

High Pressure Sales Tactics

If you get the feeling that you are being rushed or pressured into moving forward with an offer from a funding company then you need to immediately put the brakes on.

If you are constantly getting phone calls, text messages, and e-mails from an agent pressuring you to close the deal then something is wrong. There is no reason to be pressured. One of the most common tactics is when you are told "the offer is only good for today". The offer will be there tomorrow. Don't worry. Take your time and think it through. Move at your own pace. If something doesn't feel right then it probably isn't.

SBA Capital does not engage in any high pressure sales tactics. No pushy sales person will ever call you for any reason. Our goal is to get the best offer we can in your hands and let you make the decision without pressure.


If you are unsure about any portion of a contract or offer that you have received from another funding company we would be happy to review it (at no cost) and let you know if we see anything that we feel is unfair or deceptive.

Being up-front and honest about approvals and contracts is a core belief at SBA Capital. We write approvals and contracts with a "what you see is what you get" attitude. Repeat and referral business is a key to our success. Full disclosure and honesty is the only way to earn long term trust.

Please call or e-mail us if you have any questions about these practices or are interested in learning more about our cash advance program.



Toll Free: 1-800-563-4780

E-mail: info@sbacinc.com




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