6th Avenue Capital
When you start a business, you do so with the hope to grow your business into a successful venture. You don’t start your business to fail, though you will face many failures along the way. At this moment, it’s important to remember that great success is built on a foundation of failure. You learn from your mistakes, and you grow from them even in the business world. However, you don’t have to fail as often as you think. When you find yourself and your business in a situation in which you need additional funds to pay for new goods, services, employees, or product, you can apply for a small business loan. However, it’s hard to meet the requirements for this type of loan. Before you allow defeat to settle in after a denial comes through, you should know you do have another option.
How A Merchant Cash Advance Works for You
If you are denied a small business loan by a traditional lender, you have an additional option. Traditional lenders require business owners to meet specific criteria, and it’s not always possible. For example, if your business is relatively new, you haven’t had the time to create a business credit score or other business history. A bank might deny you a loan simply because they don’t know enough about your business and how it works for profit when it’s this young. You might be denied a business loan because your personal credit score is to low. You might be denied if the business plan you create is not good enough for the bank.
If you’re denied a loan, a merchant cash advance can help you with the funds you need. Most of these cash advances provide you with anywhere from $2,500 to $250,000. You get to borrow the money you need in just a matter of days, which is significantly faster than you will find a small business loan funded. You get to use this money to do whatever you see fit in your business. Whether you need to purchase new equipment to grow or hire new employees to meet demand, you can use your cash advance for whatever you’d like.
It’s funded in a few days. The paperwork required to fund a cash advance is minimal, and cash advances are available to business owners who have a young business, who have a bad credit score, and those who are denied a loan from the bank.
How Does A Merchant Cash Advance Work?
The concept is simple. You provide credit card sales statements, bank statements, business tax returns, and your driver’s license to the lender. The lender then makes the decision to fund your loan for the amount you requested, and they provide you with the details. The catch is that this is not a traditional loan. You don’t have a standard monthly payment that you know is coming out of your bank account every month. You make daily payments on a cash advance. The payment amount is different every day because it’s dependent on the amount of your credit and debit card sales each day.
This is a more expensive form of borrowing, however. You don’t have many years to repay your loan with a set interest rate. You have approximately one year to repay your cash advance using your credit card sales each day. This is beneficial to many business owners, however. If you have a low sales day one day, you will pay a smaller amount that day. This is why it’s impossible to determine how long it will take you to make the necessary repayments on a loan like this. You will make payments until your cash advance is paid off, but it might take anywhere from three months to a full year.
Is it Right for My Business?
If you cannot get a traditional business loan, a merchant cash advance might be your only source of funding to help you grow. If you have an excellent business plan that will allow you to grow and to make more profit in your business, this type of cash advance can be tremendously helpful. Borrow only what you need. You must understand that the interest rate you pay can reach well into the triple digits, which means this is a quick way to get yourself into debt.
The key to a successful merchant cash advance is to know what you are borrowing, and it’s to know that you are borrowing this money to grow your business. If you can make your sales higher and your profit bigger, you can ensure you will not go further into debt by using this expensive form of borrowing. If you can get a traditional business loan, that is always the best solution. However, a merchant cash advance is here for you when you have no more options.