A Vermont merchant cash advance is a financing solution that allows you to get a monetary advance based on your credit and debit card sales receipts. If you’re a merchant in Vermont who has been looking for the right short-term financial solution for your business, you should consider a merchant cash advance.
Merchant Cash Advances Explained
A merchant cash advance offers one of the most convenient ways for you to get a cash advance without having to provide collateral. This is good news for business owners who need quick money without the hassles of a lengthy application process.
The first thing you should know about a merchant cash advance is it’s not a traditional business loan. When you submit an application, the merchant cash advance provider will review your credit card and debit card receipts from the previous months.
If your business generates enough revenue through credit and debit card receipts, you’ll be approved for a merchant cash advance. Your merchant cash advance payments will be taken directly from your future credit and debit card sales.
A merchant cash advance can be a favorable financial solution for businesses that generate a large amount of revenue through credit and debit card sales. If you’re business doesn’t generate credit and debit card sales, it’s likely that you won’t be approved for a merchant cash advance.
How to Qualify for Merchant Cash Advances
Applying for a Vermont merchant cash advance is quick and easy. The entire application and approval process takes less than a few days to complete. You can even apply for a merchant cash advance online.
You’ll have to provide supporting documents with your merchant cash advance application. The required documents may include:
- A driver’s license
- Debit and credit card receipts
- Business information
- Yearly revenue information
Your document requirements may differ depending on your merchant cash advance provider. It’s a good idea to contact the provider for details before you submit your application.
Pros and Cons of Merchant Cash Advances
There are plenty of reasons a merchant applies for a merchant cash advance. In many instances, merchant cash advances are easier to get approved for than business loans. One of the reasons is your approval isn’t based solely on your credit score.
Another benefit is it’s easy to repay the merchant cash advance. The payments will be automatically taken from your credit and debit card receipts by your merchant cash advance provider.
While getting approved for a merchant cash advance comes with loads of benefits, there are a few potential drawbacks of getting this type of business funding. Merchant cash advances can be an expensive way to get money. Depending on your cash advance amount, you may have to repay thousands of dollars in addition to the original amount of the advance.
Another potential drawback is a merchant cash advance decreases the amount of your future revenue. Since your payments will be deducted from your daily receipts, your business revenue will be impacted. This may affect your company’s ability to pay for future expenses.
There’s no doubt about it. Merchant cash advances offer a convenient way to get money when you need it. However, you should be aware of the pros and cons of a Vermont merchant cash advance before you get one.
Factor Rates for Merchant Cash Advances
Traditional business loans are based on interest rates. Merchant cash advances are based on factor rates. Typical factor rates are from 1.1 – 1.5.
This is how a factor rate determines the total cost of your merchant cash advance. If your advance is $7,000 with a factor rate of 1.5, you’ll have to repay $10,500.
A merchant cash advance is a good source of money for businesses. It’s important to use them wisely.