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Does your company need money to pay bills or hire more employees? If so, a merchant cash advance could be the best way to obtain working capital in a timely manner. There is no need to put up collateral to get the advance, so you don’t need to worry about losing personal or business assets if the debt is not repaid. Let’s take a look at the benefits of a cash advance for your company.
Get Up to 250 Percent of Credit Card Revenue
It may be possible to get an advance worth up to 250 percent of your company’s total credit card receipts. The exact amount that you will receive depends on how long the business has been in operation and its track record creating consistent credit card revenue. It may also depend on the business that you are in and other factors deemed relevant when reviewing a request for advanced funding.
There Is No Fixed Payment Amount
When you take out a small business loan, you pay the same amount every month until the loan is repaid. This can be less than ideal for companies that have irregular income or that otherwise can’t afford to make the same payment every 30 days. With a cash advance, you pay a fixed percentage of sales generated each day. Typically, this amount ranges from 10 to 15 percent. However, rates can range from as little as 5 percent all the way to 20 percent.
Get Your Money In About 24 Hours
When you request a merchant cash advance, you won’t spend a lot of time waiting for a loan decision. In many cases, you will be approved within hours and receive your funds no more than 48 hours after an application is approved. In some cases, you could see a deposit in your business checking account in 24 hours or less.
The Application Process Can Be Done Completely Online
If you know how to upload documents to the internet, you can complete the application in minutes without assistance. Your accountant or other parties who are authorized to share documents or make requests for funding may apply on your behalf. You will need to supply information such as business bank records, corporate tax returns and merchant account data when applying. If you do need help with the application, someone can typically assist you either through a live chat or over the phone.
You Don’t Technically Pay Interest on the Loan
While you do have to pay a fee to get a cash advance, it is technically not considered interest. Instead, it is referred to as a factor rate, and it can range from 1.1 to 1.5. If your factor rate is 1.1, you are paying the equivalent to a 10 percent interest rate. The annual percentage rate (APR) that you pay depends on how long it takes to repay the balance.
Ideally, you will do so in the shortest amount of time possible. In most cases, merchant cash advances have repayment terms of at least 90 days. However, if may be possible to repay the loan in a shorter amount of time without penalty. It is always a good idea to discuss the exact terms of the advance prior to taking the money.
Obtaining a merchant cash advance can be beneficial to those who need thousands of dollars in cash without worrying about a credit check. However, before applying, be sure that you can afford to repay the advance and that it is the best funding option for your company.