Small business owners may find an Oklahoma merchant cash advance to be the perfect source of emergency funding when cash flow declines.
What Does a Merchant Cash Advance Involve?
A misconception exists about merchant cash advances. Small business owners confuse advances with loans. While similar to a loan, an MCA isn’t precisely the same as one. With an MCA, a financing company fronts cash to a business and, in return, receives a flat fee along with a percentage of credit and debit card revenues.
Merchant cash advances provide business with a simple, streamlined means of acquiring a business cash advance. Unlike a loan, an MCA does not require any collateral nor do applicants need a strong credit rating.
Loan and Fee Amounts
Many types of businesses may benefit from a merchant cash advance. The loan amounts range from $2,500 to $250,000. Fees are in the 1% range, and approvals can arrive within two days. The overall application process doesn’t require many steps. Business owners won’t agonize over filling out complex forms.
Be mindful that the fees will be higher than is the case with standard loans. Switching to a different merchant service provider isn’t easy, and cash flow decreases due to the deduction from credit and debit card payments. Many business owners, including those with bad credit, may discover an MCA to be a viable arrangement.
Applying for a Merchant Cash Advance
The average applicant owns a business in operation for more than two years and generates roughly $180,000 in revenue per year. Average credit scores rank in the 500 range.
When a business owner applies for a merchant cash advance, the financing company looks at the credit/debit card statements carefully. After all, these statements represent the means for repayment on the cash advance. Revenue streams here become more critical than credit scores. However, credit scores, along with bank statements, will likely undergo some examination.
Merchant cash advance applications usually require online submissions. Online applications speed up the proceedings. Expedited processing makes it possible for news on possible approvals to arrive within one day. Applicants must submit certain items to be considered for an Oklahoma MCA.
Businesses Suited for an MCA
Certain businesses might find a merchant cash advance deal preferable than standard loan options. Retail stores and dining establishments deal with a significant amount of credit card transactions. Therefore, these types of businesses could be a proper fit for an MCA arrangement.
Businesses that require a short term infusion of capital to cover debt, inventory, unexpected expenses, and tax obligations. The process of applying for funds involves the submission of essential items such as a drivers license, bank statements, business tax returns, a voided business check, and credit card processing statements. Submitting the requested documents does not entail performing any unnecessary steps. As long as the applicant provides all required information, the application should move along on time.
Risks and Fees
The fee rate on an Oklahoma merchant cash advance comes with a rather high price. How do the fees compare to an annual percentage rate? The fees would be equivalent to an APR of more than 15%. While costly, paying the excessive fee may be the only option for the merchant. Not every business owner has multiple sources of emergency funding available.
The repayment time varies from business-to-business. On average, repayment takes around 8 to 9 months. Of course, some may pay their obligations off sooner while others may take a little longer. Terms commonly range from four months to 18 months. Applicants should select the most feasible terms with timely repayment in mind.