Business is an activity having continuous ups and downs; in case of downward trends the businessman in most cases gets jittery and loses control of the affairs. The financial problems are the one which are to be handled with utmost care; otherwise the business may end up as a failure. It is at this juncture that businessman tend to go for financial help and run around for loan.
Merchant Cash Advance is one of the facilities for such a situation. The businessman has to be very careful while obtaining Merchant Cash Advance, keeping in mind that he or she may be involved in many other problems. Keep in mind the following important points when processing the loan documents:-
- Before filling in any forms, read all the terms and conditions laid down for the cash advance.
- Understand the requirements and obligations laid down.
- NEVER sign any blank documents or even without reading the document.
- Get clarifications of all points not understood or those creating some sort of doubt or confusion in your mind.
- REMEMBER, you must be very clear regarding the system of Payback. In Merchant Cash Advance it is based on percentage of Receivables from Credit Cards. (Visa Master Cards)
- PERCENTAGE of receivables must be decided and agreed upon by both the parties(That is the Lender and the Borrower) before the documents are signed.
- Percentage of Receivables is fixed/ constant irrespective of what is the volume of receivables. The lenders cannot alter it in any case, even if the volume of sales drops beyond a certain minimum level.
- Fees attached for the processing and agreement of documents must be negotiated in advance and agreed upon by the parties involved.
- Merchant Cash Advance is not based on the Collaterals and the lender does not ask for any valuables as a guarantee. Therefore their interest rates are normally higher than the loans given by the Banks.
As a Thumb Rule always carry out a detailed research on the subject, before you go for the Merchant Cash Advance.