A merchant cash advance can be an ideal tool for those who are looking to obtain financial flexibility for their businesses. Since it is not a loan, there is no need for a credit check. Instead, the amount of the advance is based on average credit card sales over the two to six months prior to applying for it.
What Can the Money Be Used For?
The money from a merchant cash advance can be used for any reason that your company sees fit. For instance, it could be used to buy a building, hire new employees or to fulfill a large order. It can also be used to consolidate debt or to ensure that a company has money in the bank in case of a slowdown.
How Does a Cash Advance Company Get Paid?
Each day, the factoring company that you work with will take a certain percentage of the revenue generated from credit card transactions. In many cases, the hold back rate will be 10-15 percent. However, it can be more or less depending on the specific agreement that your company enters into.
When Do You Start to Repay a Cash Advance?
Your business will start to repay the cash advance the day that you receive your funds. In most cases, your credit card receipts will be placed on hold until the factoring company receives its daily payment. After that happens, the funds will be released into your merchant account or transferred to your company’s bank account.
What’s the Difference Between an Advance and a Loan?
An advance means that you are receiving money that you have already earned or are projected to earn. A loan involves extending a line of credit that may or may not be backed by collateral. Generally speaking, loans are harder for small businesses to obtain because they may not have the minimum credit score a lender is looking for. Small businesses may also lack the track record that a lender needs to feel confident that it will get its money back.
What Type of Companies Can Get a Merchant Cash Advance?
Almost any type of company can get an advance from a factoring company. In fact, it can be a great way for organizations that offer controversial yet legal products and services to obtain the capital that it needs to thrive. In most cases, a company will need to be in business for a year or two before it is eligible for a merchant cash advance.
How Do I Apply for an Advance?
To apply for a cash advance, simply fill out the online application and send it in at your earliest convenience. Applications are usually accepted on a 24/7 basis and only take a few minutes to complete. If you need to submit additional documentation, you can do so through a secure server.
If you are looking for a way to obtain access to business capital quickly, a merchant cash advance may be the best way to accomplish that goal. Typically, your application is approved within minutes and the money sent to your account within hours. Customer service representatives are standing by if have any questions about the application process or about merchant cash advances themselves.