Austin Merchant Cash Advances

There could come a time when a business owner finds themselves in a position of needing to quickly raise capital. An effective way to accomplish this is with a merchant cash advance. It is an effective way to quickly obtain necessary funding. A merchant cash advance can be utilized for anything the business needs. It can be used to pay bills, stock up on inventory for the busy season and more.

How Does A Merchant Cash Advance Work?
They are not considered loans. A merchant cash advance is a payment given based on a company’s future income. It provides a way for a business to receive a lump sum of money automatically paid back using a percentage of its daily credit card proceeds. The percentage paid by a company is known as the retrieval rate or holdback. The amount of the advance and terms will determine how long a merchant will have to pay back the advance. Some are paid in three months and others can take as long as two years. Repayment of the advance starts as soon as a company receives the funds.

Holdback
This is a very common term associated with a merchant cash advance. It is a term used to describe the percentage of daily sales from credit cards that will be applied to paying back the merchant cash advance. This will happen until the advance is paid back in full. The more money a company makes using credit cards on any type of transaction will help pay back the merchant cash advance quicker. The length of time required to payback of a merchant cash advance will depend on the amount of money coming into a merchant’s account from credit card sales.

Application Process
There are many ways a business can benefit from a merchant cash advance. The application process is straightforward and not complicated. It is something that can be conducted online. This means important documents required for the application process including credit card processing statements, tax returns, bank account statements and more can all be provided online.

Quick Funding
A popular aspect of a merchant cash advance is approval and funding can occur rather quickly. A business owner can receive a decision on their application within a few hours. These funds will then be quickly released to the business owner. This is a great option for business owners who need it for payroll or have other expenses that need to be immediately covered.

Credit
A credit history is not an important factor in receiving a merchant cash advance. Other types of business loans require a high business credit score. The most important factor in getting a merchant cash advance is the consistency of a company’s credit card sales. The length of time a company has been in business is also a consideration. The strength of the business is more important than a business owner’s credit history.

No Collateral
Collateral is a type of property or other assets that a business owner will offer a lender so they can obtain a loan. Many types of loans from other financial institutions will require collateral. This is not necessary with a merchant cash advance.

Payment Flexibility
Other types of loans come with a fixed monthly payment. This can cause problems if a business has a slow period. Payments are flexible with a merchant cash advance because they are based on a percentage of credit card sales. A company’s payment will be a percentage of what comes into the business from credit card purchases.

High Limits
There is a lot of leeway concerning how much a company can borrow using a merchant cash advance. Some have gotten thousands and others have gotten millions. It is a very flexible way for a company to quickly get the money they need.

Benefit From a Merchant Cash Advance
This type of quick funding is beneficial for businesses who need to have cash quickly and have established a successful history of credit card transactions. Restaurants, as well as retailers and more, have benefited from a merchant cash advance. It’s also good for new businesses with a history of credit card use but has not been open long enough to establish a credit history.

Costs
It is important a business owner be aware of the costs involved with a merchant cash advance. There is no APR involved with this type of funding. A business will pay a factor rate. This will determine the amount a company has to repay those who provided the merchant cash advance. This fee can be as much as 1.5 and could look lower than an interest rate, but that may be misleading. In many cases, the factor rate can make the merchant cash advance expensive.

It’s up to each business to determine if they could benefit from a merchant cash advance. If it’s a situation where a company has strong credit card sales and needs money quickly to expand, hire temporary workers before their busy season and more, a merchant cash advance may be what is needed. It’s important they consider the costs, repayment time and holdback before determining if a merchant cash advance will be beneficial.