Georgia business owners are always looking for a way to grow and expand, and it often takes capital to make that happen. If you are a Georgia business owner with excellent personal and business credit scores, a long history of doing business, and you have collateral that’s valuable to a lender, you can seek capital in the form of a small business loan. If you are a new business owner or you don’t have great credit or any credit, you will find that lenders aren’t in the market to do business with you. It’s nothing personal, but they don’t want to loan money to a business owner who cannot prove they are responsible enough pay back the loan they’re taking.
That’s where you might find a merchant cash advance beneficial. When you need funding but cannot get it, a Georgia merchant cash advance can give you what you need. It can also put money in your pocket a lot faster than you get it when you apply for a traditional business loan. Merchant cash advances don’t require the same kind of collateral, the same requirements, or the same rules as a traditional lender, which is why it’s faster, easier, and a little more expensive. If you are considering a merchant cash advance, here’s what you need to know about how it works and what’s expected of you.
What is A Georgia Merchant Cash Advance?
A Georgia merchant cash advance is a kind of loan that’s given to business owners when they need cash. The process is fast and efficient, and you don’t have to meet a long list of stringent requirements like you do when you apply for a loan. Once you find a merchant lender, you can submit the following information and have money in the bank in as little as two business days.
– Driver’s license
– Business tax return
– Voided business check
– Credit card processing statements
– Your credit score
– Business and personal bank statements
Once this is turned in and the company reviews your information, they will call you back with an answer regarding your request. This is also when the company will discuss the repayment details with you. These repayment details are very specific, but they are based on your information.
How Does Repayment Work?
When you use a merchant cash advance to borrow, you do not get to repay it over the course of many years. It’s not a loan. It’s an advance, and that means it’s meant to be repaid quickly. Rather than paying interest on the amount of money you borrow, you will pay what’s called a factor rate. This rate is determined using your credit score and other information you provide to the merchant lender. If you get a lower factor rate, you will be repaying your loan at what would be equivalent to around 15 percent interest if you were paying interest. It is an expensive method of borrowing, but you’re repaying in nine months or fewer.
Merchant cash advances do not require monthly payments. They take their money directly from your bank on a daily basis, and that amount is based on the credit card and debit card sales you made that day. No two days will be the same if your sales are different, and it also means you have no idea just how quickly you will repay your loan. If your sales are low, it will take longer to make this repayment. If your sales are high, you will make your repayment faster and more efficiently.
Before you turn to a merchant cash advance as a way of securing funds for your business, try to get a business loan and exhaust other fundraising efforts first. This is an expensive way to borrow, and you don’t want to end up repaying more than you can afford. You must have a great business plan, and you must know how this money will help your business grow and expand. If you cannot repay the loan or find a way to make the money work for you, do not borrow it. Fix your business plan and take the time to decide how to grow and expand.