Merchant cash advances provide working capital for cash-strapped businesses. If your business is in need of working capital but doesn’t qualify for a loan from a traditional lender due to a short business history or poor credit scores, you aren’t out of options quite yet: you might be able to get money from a merchant cash advance provider — and fast.
When you get approved for funding, the merchant cash advance company provides you with a lump sum of money and owns a portion of your future sales. In other words, you’re selling a percentage of your credit card receipts to your merchant cash advance provider.
Advances are easier and faster to obtain than traditional business loans are because they don’t have the typical credit approval and processing requirements. It’s typically fast, but it can an expensive business financing option.
Who Is Eligible for a Merchant Cash Advance?
If you are frequently and consistently processing payments, you may qualify for an advance.
Merchant cash advances are a perfect fit for retailers, e-commerce businesses and restaurants. But any business that processes a high volume of credit card transactions might be able to qualify for funding.
Merchant cash advances are perfect for businesses with fluctuating revenue and lower credit scores. This can even mean new business owners who have not established a good credit history.
Some merchant cash advance lenders are even willing to work with businesses that have been around for just a few months. Qualification typically depends on the business’s credit card sales volume.
Merchant Cash Advance Uses
Merchant cash advance lenders don’t restrict how you use your funding. They provide working capital solutions to business owners in need of financing to sustain or grow their enterprise. While you may need it for payroll, another business may benefit from purchasing new equipment. The lender provides the merchant funding, and the business owner chooses how to utilize it.
A merchant cash advance can be used for:
. Improving cash flow
. Purchasing inventory
. Renovations and expansion
. Advertising and marketing promotions
. Hiring new employees
How Merchant Cash Advances Work
Merchant cash advance is suitable for businesses that have a high volume of credit card sales. It can help businesses get alternative business funding and achieve success. Whether you’re looking to get working capital for slow seasons or want to take advantage of a new opportunity, a merchant funding can provide you with fast access to cash.
You will receive a lump amount when you sign the contract. In return, the funding company has the right to take out a portion of your business’ credit card sales every day until the contracted amount is reached. Merchant funding remittance fluctuates and your remittances are based on what you can afford.
Once you receive this type of funding, the remittance is a percentage of your credit card receipts. So, your credit card sales volume make will determine the length of time it will take you to satisfy your obligation.
Businesses may have a few months when sales a high and a time when they slow down. This means you will not be able to pay the same amount during both periods. When sales are booming, you remit more, and when sales decrease and income dips, you’ll remit more. Repayment is made easy via auto debit.
Simple Application for Merchant Cash Advances
Applying for a merchant cash advance is a simple process. Most funding companies offer an easy online application process, and you can get access to the money quickly.
Unlike traditional business loans, you do not need to go through a complicated application process or wait for several weeks, or even months to get a response.
To get started all you need is fill out a simple online application, and provide your bank statements, credit card statements, tax returns, balance sheet, and other relevant documents.
If you’re trying to obtain your merchant funding as quickly as possible, it is a good idea to compile these documents before you start the application. That way, you will have everything you need to begin the process.
The approval rate of a merchant cash advance is high since businesses are not required to have an excellent credit history or a high credit score. Merchant Cash Advance providers generally look at business performance and sales volume more than credit scores.
After your application is approved, the funding company will supply the financing. You will receive the funds in your bank account.
Remember: merchant cash advances are an expensive financing option and come with higher fees than with regular business loans.
Before applying for a merchant cash advance, it is important that you carefully review and understand the merchant funding requirements. Merchant cash advance providers have these prerequisites in place so that business owners can responsibly and effectively utilize their products.