In the past, Delancey Street has helped real estate investors with hard money loans.
But sometimes, for one reason or another, entrepreneurs don’t qualify.
In situations like this, a merchant cash advance can be ideal.
In some cases, even though you qualify for a real estate hard money loan – the process takes too long, and you need capital fast.
In situations like this – a merchant cash advance is ideal!
You can get a merchant cash advance in the real estate business as a real estate investor who needs
- Funds for a downpayment on an investment property
- Construction funds to invest into an investment property
Regardless of the scenario, you can get funding. It’s not uncommon for investors to get funding via a merchant cash advance as long as they show recurring revenue and consistent revenue. Ideally, a merchant cash advance can help for a real estate investor whose constantly investing in new properties and has a proven track record and consistent revenue.
The merchant cash advance you take can give you the capital needed to buy a new investment property FAST.
Real estate hard money loans can take 2-3 weeks to fund.
In contrast, a merchant cash advance can be funded in literally 24 hours.
This speed is second to none, and when you need to buy a property fast there is nothing that beats the speed of a merchant cash advance.
Understanding the Basics of a Merchant Cash Advance
If you own a business that accepts credit and debit cards, there’s a financing option that you may have overlooked. That option is a merchant cash advance. Rather than obtaining a loan, this approach allows you to receive funds now and repay the advance using your revenue stream. Here are some of the essentials that you need to know about this type of advance, including how you can use those funds.
How Does the Advance Work?
Unlike business loans that require you to repay a fixed amount each month, a merchant advance involves allocating a percentage of your daily gross credit and debit card receipts to pay off the advance balance. The percentage remains constant, but the amount you pay toward settling the advance changes based on how much revenue you collected that day.
Who Can Qualify?
Business owners with little to no collateral can qualify for this type of funding. Since the advance is based on your history with the merchant service, there is no need for it.
If your business or personal credit score is not the best, you are still a candidate for an advance.
You don’t necessarily need to be in business for a long time to qualify. What you do need is an established track record of generating revenue on a daily basis. For example, some merchant services will consider clients for advances if they have been in business for as little as two years and generate card transactions consistently during that time.
Is the Application Process Difficult?
Many business owners find the application process to be simpler than applying for business loans. You will still need documentation like information on revenue, proof of ownership, and proof that the business is an actual legal entity. You may need to supply copies of your most recent bank statements.
How Much Can You Receive in Advance?
The amount of revenue you generate on a regular basis along with your credit score will determine the maximum amount you can receive in advance. The goal is to ensure that the balance plus fees can be repaid within a reasonable amount of time. As your business volume increases, you’ll qualify for larger advances in the future.
Remember that the advances usually have to be repaid in full within two calendar years. It’s not unusual for merchants to request advances and agree to repaying the balance in as little as three months. The team at your service will work with you to determine the amount you can receive, the percentage that will be collected daily, and how long you will have to retire the debt.
Speed is a definite benefit to merchant cash advances. The money could be in your bank account
in two business days or less. Lower credit scores do not necessarily disqualify you. The application process is less complicated than many other financing options, and you are not locked into making the same fixed payment each month. Since the advance is paid off by allocating a percentage of the day’s receipts, you pay more on days when you do a lot of business volume and less on days when sales are down.
The fees associated with merchant cash advances are somewhat higher when compared to the costs of a standard business loan.