It is not unusual for small business owners to experience the lack of sufficient funds, particularly when they are striving to grow their companies. Whether it is an opportunity to grow or advance the exclusivity of a new product line, once a rewarding opportunity knocks, a business owner needs to have funds to take advantage of it. In many occasions, you must act responsively, and a conventional bank is not a viable alternative. A merchant cash advance is the best option for securing a working capital. It helps you evade numerous challenges related to traditional loan process, letting you seize the opportunity to expand your small business.
What is a merchant cash advance?
Bear in mind that a merchant cash advance is not the same a business loan. Typically, it is a purchase and sells agreement provided by alternative lending firms and online creditors. In return for the finances given, you as a business owner reach a decision to sell the lender a percentage of your total sales at a reduced price. For you to repay the merchant cash advance, the lender will be receiving a predetermined portion of your daily credit or debit sales up to the time the cash advance will be fully settled. The amount to be paid back is the amount of the loan plus the interests. Even though the rate of interest can be somehow higher, for the majority of small business, a traditional bank loan can be hard to secure.
Simple loan application process
If you have ever tried to secure a loan from a traditional bank, then you understand the ton of paperwork involved. The merchant cash advance application is always a simple procedure that requires minimal paperwork. Alternative lenders and online lending firms use big and modern data technology in gathering the required details to find out if you are eligible to get the loan. On top of that, you can just apply for the loan, something that streamlines the process. Letting you access the funds faster.
Less than perfect credit
It is evident that every small business hits a rough patch the moment funds are tight ad bills are not paid on time. In turn, this will leave a business owner with a stellar credit report. When it comes to merchant cash advance, your credit score should not be the only aspect to take into consideration. Alternative and online creditors will need to look at the whole picture. The period in which you have been in business and the potentiality for expansion are significant factors in making a decision as well. For this reason, merchant cash advances have a higher approval rate than small business loans.
When it comes to a traditional bank loan, there is a set amount of cash you are required to pay each month. The amount must be paid regardless of how your month was. Since the payments on merchant cash advance are a set portion of your actual monthly sales, if your sales are slow in any given month, your payment will also be little.