No matter what type of small business you are currently running, there will likely come a time when you need funds to immediately infuse in your business. Whenever the time comes, you will likely be overwhelmed by all the funding options available. A merchant cash advance is a quick funding program meant to cover the short-term needs of businesses. If you have ever been through a merchant cash advance, you will understand that unlike any other business funding option, a merchant cash advance is much easier to acquire.
Why Use A Merchant Cash Advance?
Here is how a merchant cash advance is a preferable funding option for small businesses;
Simple Qualification Criteria
Businesses that can’t qualify for other types of business financing options, can easily qualify for merchant cash advance. The major requirement for getting a merchant cash advance is you must have a strong cash flow.
Fast Applying Process
Merchant cash advances carries a fast application process as compared to some other types of business funding solutions. Normally, the applying process can be completed in just a couple of minutes. Additionally, there is also nominal paperwork requirement. After submission of application, the funds will be transferred in to your bank account in just a couple of days.
Flexible Repayment Options
Merchant cash advance consist of flexible repayment options, which means that when your sales are slow, you pay less and when sales are high, you will pay more.
No Collateral Requirement
It’s no collateral requirement makes it more favorable funding program. If you don’t have any assets to place as collateral, no problem. You still can get a merchant cash advance. There is no collateral requirement for funding.
How Merchant Cash Advance Work?
Most of the merchant cash advance lenders consider their transactions to be a purchase of future sales performed through a credit card rather than a loan. In order to figure out how much funding to provide, cash advance lenders review some of the factors such as your credit card sales, bank statements and some other financial details about your business. This information will help them to have a rough idea about your future sales.
When to Use a Merchant Cash Advance?
Here are some of the best uses of merchant cash advance;
- Working capital
- Marketing
- Advertising
- Payroll
- Expansion
- Pay vendors
- Repairs
- Equipment
Pros of Merchant Cash Advance
- Easy qualification
- Quick approval rate and fast funding
- No personal guarantee required
- No collateral requirement
- Flexibility to use funds
- Repayment is based on a percentage of sales
- You don’t need impeccable credit
Cons of Merchant Cash Advance
- Repayments are not reported to credit bureau
- The rates are higher than a business loan
A merchant cash advance is an excellent funding program featuring several engaging features. As a small business owner, only you can better understand if your small business has enough credit card sales and stability to apply for merchant cash advance.
The upshot is that a merchant cash advance can be very quick, but expensive funding program. Therefore it is advised to think twice before applying for a merchant cash advance.
