Painless Way to Raise Growth Capital
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Painless Way to Raise Growth Capital

If you are a multi-unit franchise owner on a fast growth path, you are always on the lookout for sources of capital to help grow your business. That is why you will want to take a serious look at one of the latest developments that enables you to get capital, using your future credit card sales. This arrangement promises to help you raise the funds you need to expand, purchase more franchises, buy equipment and inventory, and modernize your operation.

Tapping into future credit card sales is how you make it happen. When you use future credit card sales, which is a type of factoring, you sell a fixed amount of these sales to a purchaser (the factor) at a discount in exchange for cash that you are able to get within a couple of weeks after applying. This could amount to as much as $150,000 for each of your franchise locations.

You deliver the future receivables you sold the factor via the credit card processor. Each day you ring up credit card sales, the processor delivers a percentage of your credit card sales to the factor until you provide the total amount owed. This process is generally completed within 12 months.

Advantages over bank loans
This arrangement has a lot of benefits over bank loans. For example, you don't pay interest on the money, there is no set repayment term, there are no late fees, and there is no monthly check to write. That is particularly convenient for small- to mid-sized business owners who are always strapped for time.

There are also cash flow benefits. If your sales are trending downward, for example, because it is a slow time of year for your particular business, the amount you send to the factor will also slow. Remember the factor collects a fixed percentage of the receivables it has purchased only when the business processes credit card transactions.

There are other advantages to consider. For example, the financing companies involved in providing this type of product often approve businesses that banks may decline, such as those in the food industry. "In fact, these financing companies put a high value on industries such as restaurants and retailers even though banks may consider them risky," says Glen Goldman, CEO of Advance Me, Inc. AMI maintains it is the nation's leading providers of credit card receivable financing for small and medium sized businesses.

Since 1998, this Atlanta-based company has served more than 11,000 businesses in all 50 states. It has a professional staff of 175 people, as well as a supporting independent sales contractors located throughout the country. In addition, AMI also has legal and accounting staff in Scarsdale, N.Y.

In addition to providing more than $450 million in working capital, AMI has funded more than 100 top franchise concepts. These include well-known brands such as IHOP, Denny's, Domino's, and AAMCO. IHOP franchisee Ben Kramer in Lincoln, Neb., says that this funding program is quick and easy. "There are no payments to make, no 'down' money, and the commitment is short term. It's perfect for our business," he adds.

Goldman and his staff understand that because franchise owners are involved in the day-to-day requirements of running a business, they don't have a lot of time to apply for financing. "We know that business owners appreciate financing that is quick and easy," he says. In addition, AMI knows that delays in financing mean delays in projects that could provide revenue to the business.

Goldman joined AMI in 2001. He has more than 15 years of experience in the consumer and commercial finance fields. AMI's executive team has decades of experience with small- and middle-market businesses, including financial services and payment processing.

AMI typically provides franchise owners with working capital in less than 14 working days. The product they offer was invented by entrepreneurs, who had first hand experience with successful businesses that encountered difficulty getting funding from traditional financial institutions.

If you are already using one of AMI's approved credit card processors, it is possible to actually trim the time it takes for approval to 72 hours. You should be aware that factors want to collect the receivables they have purchased over a much shorter time than banks want loans to be repaid-generally within one year.

When looking for a company that specializes in this type of factoring, be sure you go with a reputable firm. You want an established provider with a proven track record. You should take the time to find out how many total customers a company has served, the total dollar volume of funding provided, and the company's funding capacity.

Keep in mind that AMI is unique in that it has developed a sophisticated economic model for its program. "By looking at four months of a franchise's credit card receipts, we can pretty accurately predict what the business' credit card receipts will be in the future and the amount of funding we can provide that will help the business without negatively impacting cash flow," says Goldman.

AMI believes it is fulfilling a very important need that growing businesses face as they try to expand. "This is not financing of last resort," Goldman says. "It is a different way to providing funds to worthy businesses underserved by traditional financing institutions and lenders, or to business owners that appreciate funding that is quick, painless and aligned with their business' revenue stream," he adds. AMI has found that 75 percent of eligible customers now decide to go for another funding round with AMI.

AMI says it is attempting to create value for merchants by providing financial solutions that will help them build and manage their businesses. Says Goldman: "We have constructed a product that recognizes business success instead of focusing on personal credit."

To qualify for financing, AMI wants to know how long you've been in business, that you have a minimum monthly credit card volume of $3,000 and that your franchise meets a few other minimum qualifying criteria

If you are interested in applying, you can do so online at

Published: June 26th, 2006

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