[ADiamond]

Since a factor rate is technically not "interest" as defined by the IRS when deducting the cost of borrowing money as a business expense, would a merchant still be able to deduct the cost of borrowing money with a cash advance defined as a "purchase of future receivables?"

I'm assuming it's in a gray area of tax law, and I hear a few reps using it as a selling point without actually knowing for fact what they're saying.

[fundgorilla]

I hear this phrase too, and I always wonder. I have also spoken to customers who claim to have written the expense off on their returns.

[Chambo]

That is something that would need to be discussed with the merchants' accountant and NOT advised on by some educated 24 year old!

[JSL23]

Since a factor rate is technically not "interest" as defined by the IRS when deducting the cost of borrowing money as a business expense, would a merchant still be able to deduct the cost of borrowing money with a cash advance defined as a "purchase of future receivables?"

I'm assuming it's in a gray area of tax law, and I hear a few reps using it as a selling point without actually knowing for fact what they're saying.

From what I understand (and I do tell the Merchants to consult with their Accountants for specific answers) that since they are selling future sales at a discount they are, technically at least, operating at a loss which does have benefits come tax time..... I don't know the process works or how much $$ can be deducted, but I have heard that is the case from multiple sources.