As you probably know, there are often situations that occur when running a business that require immediate access to capital. One of the main reasons why small business owners consider merchant capital is because it provides fast cash.
Access to Capital Quickly
Whether it’s an unexpected expense that your business has incurred or a potentially high value growth opportunity, it’s not uncommon to need funds right away. In this type of scenario, you typically don’t have the time and energy that it takes to apply for a small business loan. This is the kind of situation in which you can use merchant capital advances. Within just a couple of days, you can be approved for the amount you need, up to $250,000. Just keep in mind that merchant capital is often expensive, which means you’ll have to decide whether having access to capital quickly is work the high cost. Sometimes a merchant cash advance makes sense because you’ll only have it on your books for a short timeframe.
Approval with Bad Credit
Anyone who has taken out a small business loan knows that the process can be complicated and sometimes overwhelming. There’s also the very real chances that you won’t qualify for the loan after you have put forth a significant amount of time and effort. A key benefit of a merchant cash advance is that you could very well be a good fit, even if you don’t meet business loan requirements. Although on the surface it might sound hard to believe, the fact of the matter is that your credit is not as significant with a merchant capital advance. Even if you have bad credit, you can still qualify.
If you’re familiar with SBA loans, then you know it’s difficult to qualify unless you have stellar personal and business credit scores. Quite frankly, even then you might run into obstacles with getting the loan approved. Fortunately, there are products on the market that can help you get the funds you need, and a merchant capital advance is a great option.
Start-ups Can Qualify
One of the main factors involved in qualifying for a small business loan is how long you have been in business. Typically, lenders want to see that your business has been in operation for at least a couple of years because this demonstrates your ability to overcome the obstacles associated with running a business.
The Small Business Administration has reported that less than 50% of small businesses last 5 years. This is one of the main reasons why it’s difficult to get a traditional loan or an SBA loan if you haven’t been in business for years. That’s not the case with a merchant cash advance. They typically require you to have been in business for a minimum of 5 months. Even if you’ve just reached your 5 month anniversary, there’s a chance that you will qualify for a merchant cash advance. Since repayment is from your sales, they’ll want to see that you have at least $100,000 in revenue.
You Don’t Need Collateral
The issue of collateral is one that can cause trepidation during the lending process. Either you don’t have appropriate collateral or you don’t want to offer your house, business inventory or car to secure a loan. Lenders simply want to make sure they have another recourse in the event that you go out of business. When applying for a small business loan, you may not have a choice, but that’s not the case with a merchant cash advance. Essentially, if your business is unable to pay the money back, there are limited legal options for the merchant capital provider. However, in order to mitigate this risk, a merchant cash advance without collateral is considered high risk and will typically charge a higher APR.