Does your small business have healthy credit card sales? Merchant cash advances are an alternate funding source for small businesses that have strapping credit card sales. With merchant cash advance, the small business gets a lump sum amount of cash at the start of the cash advance agreement. The merchant cash advance lender then gets a percent of the credit card sales each month till the complete repayment is paid off or agreement ends.
The question that will pop up in your mind is that, would a merchant cash advances work for your business enterprise?
Here are four basic rationales why a merchant cash advance might be the best available option for your small business:
- MCA Requires No Credit Or Collateral
One of the major challenges that every small business encounters is getting the appropriate financing according to their needs when it is required. In case the small business has no established credit, or a bad credit background, getting a business loan is more or less impossible. In those instances wherein a business loan is authorized, it generally involves getting the business loan by pledging some of valuable assets of your business in terms of collateral. Merchant cash advance is completely an unsecured type of financing that doesn’t require any credit checks or collateral.
- Pay When You Get Paid
With merchant cash advance you need to make a monthly payment to the cash advance lender. It is a small fraction of your credit card sales for the month. If you are having a great month, I mean sales wise, when your sales are good; your repayment rate will be higher. And when you are having a slow month, the repayment will be smaller. This lets in you to pay back the borrowed amount without using up your business’ working capital.
- Easy Application And Collection Process
The application process of merchant cash advance is fairly easy. The cash advance lender will take a look at just two things: how much time you have been in the business and your monthly average sales from credit card. There are many cash advance lenders out there who require the small business to have been up and running for at least 3-5 months. The standard monthly credit card sales need to be around $5,000 per month, with almost four months considered in the standard calculation.
- Quick And Safe Infusion Of Cash
The initial approval of merchant cash advance generally takes less than 24 hours. The turnaround time between the approval of your application and the cash advance is usually pretty quick. That means you will have the cash you need on the same day when you get approved. This quick process can give you the chance to purchase the stock to fill that large order. Merchant cash advance is the quickest funding among all business financing programs.
In case you need to gain working capital without more ado, and have a strapping history of credit card sales, then merchant cash advances is the financing program to consider. Even though it is expensive than the commercial financing; however, it provides the adaptability required by majority of small businesses.