There are numerous working capital options available to small business owners, but not everyone is eligible for a loan. In fact, finding a bank willing to lend money to new small and medium-sized businesses is a common problem. Many traditional lenders are reluctant to lend money to new businesses because they lack the necessary credentials to prove their trustworthiness.
Many businesses may not be able to get traditional financing, so merchant cash advances may be the best option for them. An MCA may be your only option if you’ve been in business for a short period of time or have a poor credit history. A cash advance is one of the simplest ways to obtain additional funding for a small business owner, despite the fact that every situation is unique.
A merchant cash advance is a type of business funding that is designed to help businesses gain access to the cash they need in a flexible way. In short, the lender provides the business with a sum of money which it pays back through a percentage of its customer’s card payments.
Small businesses are always on the lookout for strategies to expand while retaining a steady flow of revenue. It is a sort of company funding that is aimed to assist firms to get the money they need in a flexible manner. In other words, the lender lends money to the firm, which it repays with a portion of the credit card payments it receives.
Let’s take a look at some of the top benefits of this type of finance.
Often when you apply for a business loan via a bank, it can take time for the money to reach your bank account. A merchant cash advance, however, is an example of fast funding. If everything goes to plan, you can expect to see your small business advance credited to your account within 24 hours, which is a lot faster than the usual traditional loans. The maximum time that you might have to wait is up to two to five days. Timing is a critical component for any successful company and having an improved cash flow will be beneficial, especially if it is quick and easy funding like a merchant cash advance.
A bank may take some time to deposit the money into your account after you apply for a business loan. An example of fast funding is merchant cash advance. Small company loans can be deposited into your account within 24 hours if all goes according to plan, which is a lot faster than traditional loans. The maximum wait period is between two and five days.
If you apply for a small business loan through credit unions or banks, you will realize that they always ask for excellent to good credit scores. The application process of a merchant cash advance is however simple and if even you do not have an impeccable credit score you could still qualify. The most important requirement that cash advance providers have is that the applicant makes a certain amount in business credit card sales each month. The lender can then see you will be able to remit the advance responsible. So, if your business is one that makes frequent credit card sales, a merchant cash advance could be a viable option.
For a small company loan, credit unions or banks always require exceptional to good credit scores. A merchant cash advance application process is straightforward, and even if you don’t have a stellar credit score, you may still be eligible.
No Assets Risk
With other types of finance, you may be requested to place financial health on the line. Getting a loan approval may require a high credit score, a history of good business behavior, or significant collateral such as some type of asset. With a merchant cash advance, the advance is based on future sale revenues so you do not need to prove your worth.
You may be asked to put your financial well-being at risk with various sorts of financing. A high credit score, solid business history, or sufficient collateral may be necessary for a loan to be approved. With a merchant cash advance, you don’t have to establish your worth because the advance is dependent on future sales.
Easy Ways to Repay
Merchant cash advance repayment is as easy as approving the advance. However, it will depend on your merchant and their payment scheme. You can ask them if they allow daily, weekly, or monthly payments. With traditional loans, you are asked to pay a flat monthly fee, which includes the interest. However, merchant cash advance works a little bit differently. It will be based on a % of your credit and debit transaction. This means that depending on how much you earned; you will get the liberty to pay accordingly.
Getting a merchant cash advance is as simple as saying “yes.” However, this depends depend on your merchant and the payment method they choose. Paying by the day, week, or month is entirely up to you; you can inquire about this option. Traditional loans require you to pay a fixed monthly charge, which includes interest, for the duration of the loan.
Merchant cash advances may not be the right choice for every business, but they have numerous perks, especially if you do not qualify for traditional financing options. Working with a team of lenders to the likes of Merchant Money, Boost Capital, and Nucleus who provide merchant cash advances, Funding Bay can help boost your business through this merchant cash advance .