Fox Business Funding Business Loans and Merchant Cash Advance
Merchant cash advances are lump sum payments are given to businesses in exchange for future debit and credit card sales. Businesses that want to get a merchant cash advance will need to fill out an application. Your business’s revenue and the amount of time that you have been in business are the main factors that will be used to determine whether you will get approved for a merchant cash advance.
How a Merchant Cash Advance Works
You will get your funds and pay them back in one or two ways. The merchant cash advance provider will take a portion of your debit or credit sales. You can also make daily or weekly ACH payments from your bank account.
Benefits of Getting a Merchant Cash Advance
A merchant cash advance offers many benefits. There are many reasons that businesses love merchant cash advances.
The Application Process is Straightforward
Many lenders require that you go to the bank in order to apply for a loan. However, you can fill out a merchant cash advance application online. You can fax any supporting documentation to the company. This includes things such as bank statements, business tax returns and credit card statements. Furthermore, it is easy to fill out the application.
You can quickly get the funding that you need if you apply for a merchant cash advance. You can get your funds within a day of getting approved. Many businesses get a merchant cash advance because they do not have time to wait for their funds. That is why merchant cash advances are great for covering unexpected expenses and payroll expenses.
You do Not Need Perfect Credit
Many lenders will take your business and personal credit score into consideration before they approve you. However, a merchant cash advance provider will be more lenient. The consistency of your sales is one of the things that will be taken into consideration before you are approved.
The lender will also consider how long you have been in business. The main thing that the merchant cash advance provider wants to know is whether you will be able to pay the money back. That is why you can get a merchant cash advance regardless of whether you have bad credit or no credit at all.
No Collateral is Required
Many banks require that you put down collateral. This is an asset or property that the lender can seize if you default on your loan. Merchant cash advances are unsecured. You do not risk losing your property or assets if you default on the loan.
Many loans have set payments and interest rates. This means that you will have to pay the same amount each month. However, this can become a problem if you have a slow month and are not able to make the payments.
You will have more flexibility if you take out a merchant cash advance. The payments are based on your credit and debit card sales. The merchant cash provider will take a percentage of your sales. This means that the amount that you can pay per month can vary. When your sales are down, you will not have to pay as much.
The amount that you can borrow can vary. However, a merchant cash advance provider may allow you to borrow more than a traditional bank.
What Businesses Should get a Merchant Cash Advance?
Businesses that generate their money via credit card and debit card sales and need money quickly are good candidates for a merchant cash advance. Restaurants and retail stores often get merchant cash advances. New businesses that generate credit and debit card sales, but they do not have an established credit history may also be a good candidate for a merchant cash advance.
What is a Factor Rate?
Unlike other types of loans, merchant cash advances do not have an interest rate. MA merchant cash advance provider will charge a factoring rate. This fee will range from 1.1 to 1.5. The factoring rate will be added to your loan balance.
For example, you take out a merchant cash advance for $30,000. The factoring rate is 1.2. You will end up paying back $36,000.