When it comes to funding your small business’ operations, you’ve lots of options available. There are traditional bank loans, SBA loans, equipment loans, crowdfunding, hard money lenders and the list goes on and on. However one of the best, and possibly most common, types of financing is a business cash advance, also known as a merchant cash advance.
What Makes Them Preferable Option?
Let’s examine some of the major benefits associated with business cash advance.
- 100% Approval Rate
Business cash advances are frequently the most preferred funding option for their 100% approval rate. In case you have bad credit problems, cash advance is not going to prevent you from getting an advance. Your score could be under 500 and given that your receivables line up, you may still get an advance.
- Collateral Not Required
Another good thing about business cash advances is that there is no collateral attached with it. It is a sales transaction, and nothing can be noted on your credit report. Because in cash advance setting, the lender is taking all of the risk.
- Use Capital Flexibly
While some lenders have a strict criteria regarding the borrowed amount, however you can use a merchant cash advance any way you need. You may use it for advertising and marketing, purchasing equipment, for payroll, buying real estate, paying for rent or lease, and so on. The amount is yours and you are free to use it.
- Simple Repayment
In the end, you will appreciate the easy repayment process. Because your business cash advance is revenue-based, you only need to pay back the advance in proportion to the sales you complete. To put it simply, it is almost impossible to get yourself in a position where you cannot payback.
How to Choose the Best Cash Advance Lender
Once you find that a business cash advance is the program that you are looking for, you will start to recognize simply how many cash advance providers are out there. Here are some tips to help you in picking the best cash advance lender for you:
- Compare Rates
As business cash advance lenders are basically offering you with cash in return for something you don’t have yet, they charge actually excessive rates. They don’t ask for collateral, but they want the effort to be well worth it. Consequently, the lenders charge high rates and fees. The rates can differ from lender to lender and therefore it is suggested to do your research work for better rates.
- Consider Industry Knowledge
Most small businesses don’t realize that industry knowledge plays an important role in being successful with a business cash advance. You need to ensure the lender you are considering has worked with other businesses in your industry.
- Read Reviews about Reputation
A business cash advance lender may win you over with a well-designed website and engaging promises, however does it live up to its claims? You will be communicating a lot with your cash advance lender throughout the repayment process, and it’s a way easy experience if you feel secure and comfortable with them. Go online and search for reviews about them so check their reputation.
- Examine Terms and Condition
It is important that you examine the terms and conditions and conscientiously consider all terms before signing on the contract with a cash advance provider. When you consider that MCA providers are technically not lenders, business owners have little recourse to government regulatory support should the relationship go wrong.