Is a Merchant Cash Advance Right for Your Business?  

Is a Merchant Cash Advance Right for Your Business?  

A merchant cash advance is an alternative to traditional bank loans over the last 10 years that can assist Business owners with less than perfect credit attain financing for expansion, staff, inventory or just about anything else. If you have less than perfect credit or do not meet the qualifications for a regular bank loan this could be a viable    get financial help with an advance   way to get necessary cash flow. A merchant cash advance, also known as factoring does not depend on personal credit or guarantees but involves the purchase of future credit card sales. In most cases no collateral is needed. A credit check may or may not be necessary but good credit is not usually required since the focus is on projected credit card sales not personal credit. Because of this the merchant cash advance industry has exploded over the last few years as business owners have had to find other solutions to get the financing they need.

How it works is quite simple. The business owner fills out a simple online form. Once approved there are no stipulations as to how the funds may be used. The payments are made automatically through a percentage of future credit or debit sales. The balance will consist of the payment amount plus a fee that is agreed upon through the process of application. In most cases the funds are made available within a few business days and often approved within 24-48 hours. The payment is determined by the profitability of the business and can be either a percentage or a fixed daily payment which is automatically applied to the balance until it is paid off. The process is automatic so you never need to worry about making payments or writing checks. Terms tend to be much more flexible than those of a traditional bank loan. The lenders only get paid back when you make the sales.

Qualifications vary but if a business has been operational for 6 months to a year and has a consistent revenue of $4000-$5000 in credit or debit card sales it has a very good chance of being approved. Collateral or a personal guarantee is usually not required making it easier to qualify if your business is a recent start-up, not yet turning a profit or if you have poor personal credit. Often tax returns or large amounts of paperwork are not required.

Rates of a merchant cash advance can be high, around 30% depending on the company and your circumstances. Many factors can affect your rate including the size of your business, the amount of the cash advance, the degree of seasonality in your business, the average size of the sale among other things. This type of financing tends to attract those who for whatever reason do not qualify for a traditional bank loan. The types of businesses that are usually accepted can be just about any type that accepts credit/debit cards and has a physical location, such as restaurants, retail stores, spas and salons, automotive shops and others. The amount of a merchant cash advance can start at $5000 and go up to $500,000 or more.

 

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