If you are a small business owner look for ways to acquire capital to help you grow your business, then a cash advance, also called a merchant cash advance can prove to be an option well worth considering.
The merchant cash works on a simple principle, the merchant gives the business owner upfront cash or capital in exchange for a certain preset percentage or portion of all credit card sales. Many small business financing companies offer merchant cash advance options. This type of financing has extremely flexible conditions for approval, some lenders do not even request the FICO score (credit score) of the borrower.
Businesses often need speedy access to cash for things such as paying employees, purchasing inventory, buying new equipment, marketing, expansions or renovations, etc. Following are some of the major advantages that make merchant cash advance a viable and cost-effective option.
1. Credit score is not a factor in the approval process
Banks are often hesitant when it to extending business loans to owners with poor credit score. Such businesses will be considered too risky and their ability to pay back the loan will be suspect. Merchant cash advance however do not consider credit score a factor when evaluating loan applicants. Businesses with bad credit will be able to secure a merchant cash advance from a lender without much difficulty. However if you have a prior bankruptcy on file or do not have the ability to process the credit card transactions of your customers, the merchant cash lender will reject your application
2. No collateral is needed
Merchants issue cash and rely on the fact that recovery will be made from the future sales that the borrower makes. This guarantee is enough for them and they do not require any collateral from the business owner as security. The borrower does not risk losing the collateral and can safely get the required cash.
3. Application process is simple
Merchant cash advances are easy processes. From start to finish the process usually take about two to three days. Unlike traditional banks, merchant cash lenders do not spend lengthy periods examining financial statements, tax returns, credit reports and business plans.
Merchant cash lender will only look at cash flow receipts, credit card receipts. The length of time you have been in business is also determining factor.
4. Provides quick access to funding
Since merchant cash advances require less paperwork, the process of getting funds moves fairly quickly. The maximum time is usually up to a week. The business owner can start using the funds and inject much needed cash into their business.
5. Collections are revenue-based
Merchant cash advance collections are based on the revenue you earn. If the sales volume is low then the amount you have to pay is low, if the sales volume is high then you pay a higher amount.
These advantages make merchant cash advance an ideal way of getting business financing. Business owners will reap the benefits quickly and expand their operations if the loan is utilized with careful planning.