Almost all small businesses need a way to raise capital, and it is important for small businesses to have a way to quickly raise money that they will be able to pay back. One of the most effective and safest ways to save money is with the use of a merchant cash advance.
How A Merchant Cash Advance Works
The basics of a merchant cash advance are that a company provides you with a lump sum upfront payment. You then pay back the advance by having the merchant take a portion of your company’s debited revenue. The merchant provides a flat rate fee for this service.
How A Merchant Cash Advance Is Different Than A Line Of Credit
A merchant cash advance is not a line of credit, and it will not have an effect on your available credit. This means you can keep your credit open for other uses. This makes a merchant cash advance an excellent financial product for covering such things as payroll and minor expansions. A merchant cash advance allows you to avoid cash flow problems without having to use things like business credit cards.
Steps Involved In Getting A Merchant Cash Advance
There are a few basic steps involved in securing a merchant cash advance. These steps include:
– Find A Merchant
– Apply For An Advance
– Settle On Amounts, Fees, And Terms
– Settle On A Payment Method
– Finalize The Agreement
– Receive A Lump Sum Advance
– Payback The Amount Through Debits
How A Merchant Cash Advance Is Paid Back
A merchant cash advance is paid back by taking a portion of your business’s income. There are three basic ways that a business can do this with each method being largely the same. They can have your bank send them a portion of your income from debit and credit transactions. They can also have your income go into an account owned by the merchant. They will then forward the remainder onto you. Finally, they can look over your invoices from your credit and debit accounts and then debit your accounts.
What Businesses Are Prime For A Merchant Cash Advance
A merchant cash advance is best for a business that has a large number of debited transactions on a regular and reoccurring basis. This means that the lender can take a small amount from each transaction. This includes such things as local retailers, ecommerce sites, and property owners and developers.
Merchant Cash Advances For Businesses With Little Credit Or Bad Credit
The amount that a merchant is willing to advance to you depends on your business. However, the merchant will generally not care about your business’s credit. Instead, they will look at your revenue stream. This means that you can secure a large cash advance if you have regular payments going into your accounts. This makes a merchant cash advance a good option for a business that needs to protect their credit for other uses.
Merchant Cash Advances Are Quick To Secure
Most merchant cash advances can be distributed in 24 to 48 hours. This allows you to cover expenses quickly. In addition, this allows you to use a merchant cash advance like a liquid form of credit.
These features mean that you can use a merchant cash advance to grow your business without having to take on debt in the form of a line of credit.