Want to fund your small business? Looking for fast and flexible funding? A merchant cash advance can be the funding solution for you. Cash advances are best possible alternative business funding solution. And because of their quick application and approval process, flexible credit requirements, they are the most preferred funding program for small business owners. As with any other funding program, cash advances have their own benefits and drawbacks. It is good to know what you are stepping into before applying for a cash advance. Here, we will get you through each and every step involve in cash advance lending process.
What is a Merchant Cash Advance and How It Works?
A merchant cash advance is a business funding program, characteristically unsecured in nature. In this program, your lender will purchase a part of your prospective sales from credit card. In cash advance program, your lender will examine your business’ credit card receipts to find out if you’ve can repay the borrowed amount through your day-to-day sales from credit card. It works totally different from traditional loans. It is basically a lender and borrower agreement, which is based on a couple of factors such as the advance amount, repayment amount, and the retrieval rate.
Who Can Use A Merchant Cash Advance?
Businesses who need quick access to cash and have no time and assets to place as collateral, merchant cash advance is the best funding option for them. Cash advances can be used for a number of business objectives, whether it be for expansion, payroll, and equipment purchase, covering large orders, seasonal expenses and hiring workers. For new and startup businesses, who even didn’t have perfect credit to apply for a traditional funding, cash advances are excellent option for them.
It is also perfect for the small business who doesn’t have sufficient assets to present as collateral. Because of cash advance’ flexible repayment options and its short-term nature, merchant cash advances are the best fit for meeting immediate needs of any business.
A business with low or below average credit score can also get cash advances. However, lender will assess some credentials, and credit is the major thing that they will consider. However, some lenders will only consider your repayment ability.
For cash advance, you need to assure your lender that you will have enough and stable credit card sales that you will easily make repayments of your cash advance. And they will assess this by checking your credit card receipts of last three months.
Requirements for Cash Advance
Every lender’s requirements are unique for cash advance program. Some might require you to maintain a minimum monthly credit card sales of $2,500, and on the other hand some might require you to maintain even more with a minimum one-year history of running a business, generating at least $50,000 in annual revenue and minimum 500 credit score.
Merchant Cash Advance Advantages
Merchant cash advances offer lots of advantages to small businesses. Here are some of the major advantages that a small business can get with a merchant cash advance;
- Simple and Easy Application Process
As of to date, many cash advance lenders have online presence on internet and they are offering online lending to small businesses. The online application process of a cash advance is simple and easy. All you need to do is to attach some supporting documents with your cash advance application.
- Credit Doesn’t Matter
Some of the businesses are experiencing with bad credit issues. Their bad credit status are hindering them from taking any kind of business funding. However with merchant cash advance, perfect credit is not a requirement.
- Flexible Repayment Options
As with traditional funding, you don’t need to pay fixed monthly payments. In cash advance program, the repayments are flexible since the percentage is directly based on your credit card sales. If your sales are slow, you pay less and when your sales are good, you can pay as per preset amount.
- Quick Approval Process
Cash advances are relatively quick rather than traditional funding programs. You can get approval in minutes and funding in just a couple of days or in some cases, the approval and funding on the same day.
- No Collateral Requirement
In case you failed to repay merchant cash advance, your personal or business assets are not on risk as cash advance has no collateral involvement. This alleviate your stress regarding losing your personal or business assets.
Why to Consider Alternative Lending for a Merchant Cash Advance
As merchant cash advance is a quick funding program, you need to get it from a quick funding source such as alternative lenders. There are some cash advance lenders who provide a funding solution that is amazingly fast and flexible, with a flat repayment plan.