North Carolina Merchant Cash Advance
Merchant cash advances have been around for several years and many small business owners have used them in order to keep their companies afloat. A cash advance is not a loan as you might receive from a lending institute but rather is an advance on your credit card sales. When you apply for a merchant cash advance, once you are approved, the company will take a certain percentage of your credit card sales in order to repay the advance. You will need to show proof of your past credit card sales as one of the requirements of the application as well as bank statements. The company will also charge a small processing fee for the advance that will also be taken out of your future sales.
A merchant cash advance can be processed and completed within a short period of time so that you can have the cash you need right away, while traditional loans may take weeks to complete. Repayment of the advance is made automatically with each credit card transaction you complete so that there is no monthly payment that you need to make. They are often paid back quicker than typical loans. Many small businesses with less than perfect credit scores will most likely be approved for a cash advance since the process for approval includes your business credit card transactions. If you own a business that conducts most of its transactions via credit card, such as a restaurant or online retail store, you are most likely to be approved.
While taking a cash advance may seem to be a quick and easy way for you to get money you need right away, there are several things you should consider before you apply for one. The fees that are associated with this type of advance can be higher than a traditional loan. However, many business owners feel that the ease with which you can repay it, is worth the extra fees. Since money is deducted with each credit card transaction, you will not be receiving the full amount of each sale that you make. The loss of this cash can be hard if you depend on each sale to run your business. On the plus side, though, a cash advance can give you money you need in a much shorter time than a loan. The repayment of a cash advance will typically take less than a year, depending on your business sales, whereas, a loan has a set term and repayment options. Another consideration is whether your business has stellar credit or not. If you would not typically qualify for a loan from a lending institute, you may be able to get a cash advance easily.
Merchant Cash Advances Explained
A merchant cash advance offers one of the most convenient ways for you to get a cash advance without having to provide collateral. This is good news for business owners who need quick money without the hassles of a lengthy application process.
The first thing you should know about a merchant cash advance is it’s not a traditional business loan. When you submit an application, the merchant cash advance provider will review your credit card and debit card receipts from the previous months.
If your business generates enough revenue through credit and debit card receipts, you’ll be approved for a merchant cash advance. Your merchant cash advance payments will be taken directly from your future credit and debit card sales.
A merchant cash advance can be a favorable financial solution for businesses that generate a large amount of revenue through credit and debit card sales. If you’re business doesn’t generate credit and debit card sales, it’s likely that you won’t be approved for a merchant cash advance.
How to Qualify for Merchant Cash Advances
Applying for a Vermont merchant cash advance is quick and easy. The entire application and approval process takes less than a few days to complete. You can even apply for a merchant cash advance online.
You’ll have to provide supporting documents with your merchant cash advance application. The required documents may include:
- A driver’s license
- Debit and credit card receipts
- Business information
- Yearly revenue information
Your document requirements may differ depending on your merchant cash advance provider. It’s a good idea to contact the provider for details before you submit your application.
Pros and Cons of Merchant Cash Advances
There are plenty of reasons a merchant applies for a merchant cash advance. In many instances, merchant cash advances are easier to get approved for than business loans. One of the reasons is your approval isn’t based solely on your credit score.
While getting approved for a merchant cash advance comes with loads of benefits, there are a few potential drawbacks of getting this type of business funding. Merchant cash advances can be an expensive way to get money. Depending on your cash advance amount, you may have to repay thousands of dollars in addition to the original amount of the advance.
Another potential drawback is a merchant cash advance decreases the amount of your future revenue. Since your payments will be deducted from your daily receipts, your business revenue will be impacted. This may affect your company’s ability to pay for future expenses.
There’s no doubt about it. Merchant cash advances offer a convenient way to get money when you need it. However, you should be aware of the pros and cons of a Vermont merchant cash advance before you get one.
Factor Rates for Merchant Cash Advances
Traditional business loans are based on interest rates. Merchant cash advances are based on factor rates. Typical factor rates are from 1.1 – 1.5.
This is how a factor rate determines the total cost of your merchant cash advance. If your advance is $7,000 with a factor rate of 1.5, you’ll have to repay $10,500.
A merchant cash advance is a good source of money for businesses. It’s important to use them wisely.