American Express Merchant Financing stands out as one of the top merchant financing options on the market, as it has low to moderate APRs, a reputation for strong customer service, and excellent prepayment discounts with its one and two-year term loans. American Express does tend to ask for more financial history documents than other lenders, but it’s important to keep in mind that when you can provide more financial information, you usually end up with a better rate on your loan.
American Express has a few basic requirements of any borrowers. You need to have been in business for at least two years and have $50,000 per year in revenue, with $12,000 per year or more coming from credit or debit card transactions. Of course, your business has to accept American Express cards. There are industries that aren’t eligible for American Express Merchant Financing, which it lists on its website.
American Express has two types of merchant financing: term loans and settlement advances.
Merchant term loans through American Express are available for one or two years, and you can borrow between $5,000 and $2 million. On both term lengths, the APR will range anywhere between 11 and 27 percent. With a one-year loan, the fee will be 1.06 to 1.14 times the amount of the loan, compared to 1.12 to 1.28 times the amount of a two-year loan. One thing to note is that with term loans, your business needs to have processed American Express cards for the same length of time as the loan. For example, if you want a two-year term loan, your business must have processed American Express cards for the last two years.
American Express calculate the fee up front. However, repaying a one-year loan within 180 days or a two-year loan within 360 days earns you a 25-percent rebate on your remaining loan balance. Repaying a one-year loan within 270 days or a two-year loan within 540 days entitles you to a 10-percent rebate. These repayment deals are among the best available, making American Express a great choice if you think you’ll be able to repay your loan early.
If you’d prefer to go monthly, you can choose a settlement advance through American Express. You can borrow between $10,000 and $1 million per month at an APR between approximately 11 and 16 percent. Settlement advances carry a flat fee that ranges from 1.005 percent to 1.0067 percent per month. While settlement advance agreements last one year, you or American Express are able to terminate the agreement at any time. The agreement renews automatically after a year.
You can apply for American Express Merchant Financing online by entering information about yourself and your business, along with your business’s financial records. After that, a representative gets in touch with you to go over your options that will fit your specific needs. If American Express approves your loan application, you’ll get the money promptly, sometimes even within one business day (although it can take longer depending on the circumstances). While you have to provide more financial records than you would with most other lenders, the overall application process is fairly standard.
Where American Express sets itself apart is with its professionalism. The company has an excellent reputation, and you don’t have to worry about shady tactics or unprofessional customer service representatives. The company explains its merchant financing options clearly on that section of its website, without hiding anything in the fine print. When you obtain merchant financing through American Express, the company provides one representative as your contact so you don’t have to worry about calling in and explaining your entire situation to a different representative each time. American Express takes care of its customers, and it’s easy to handle any issues by contacting your representative.
You can automatically repay your financing through a percentage of your American Express card transactions, or through lock box withholding. Consistent with many other lenders, American Express lets you check your balance online to see how much you have left to pay. One thing to keep in mind with American Express is that it will increase your withholding limit if you get behind on payments, until you catch back up. If you’re too far behind, it can even take that withholding limit to 100 percent. While this is an issue for some customers, you don’t have to worry about it if you stay current with your payments, and it’s something that American Express clearly states online.
Overall, American Express Merchant Financing ranks near the top in every category. The only area where it isn’t as convenient or quick as other lenders is during the application process because of the financial record requirements, but this is a minor concern at most. American Express makes the repayment process easy, provides fantastic service, and has rates that as good or better than almost any other lender.