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What is Merchant Cash Advance and how exactly does it suit your business?
For over a decade, firms with poor credit and no way of obtaining loans from banks have had an alternative source of financing for their business, the Merchant Cash Advance. Also known as factoring, it is a loaning service that is easier to obtain compared to the traditional loans offered by the bank. Businessmen have turned to factoring for financing whenever they fail to acquire loans at the bank for whatever reason.

Contrary to the conventional method of requiring collateral and guarantees in order to be issued with loans, none of that is needed. Only credit card sales are of importance. This non-requirement of personal credit or collateral has since grown the service, and the industry is booming. To top it all off, the freedom on the use of the money borrowed continues to make factoring the best alternative to bank loans.

How to acquire the loan?
The process is quite simple and fast. With the digitization of the finance sector in the last couple of decades and the introduction of automated services, the application process couldn’t be any simpler.

To apply for Merchant Cash Advance the interested applicant goes online and fills a form with all the details

He awaits approval which usually takes less than two business days
Once approved. The funds are availed through a percentage of debit or credit sales

A previously agreed upon fee is charged to the whole amount and is included in the balance to be paid.

All payments are automated, and so the payment plan is simple as well.

How the recipient of the funds chooses to spend it is up to them, and no limitations are put in place. These flexible terms offered are what ensures a steady stream of applicants.

How does one qualify for this service?

The qualifications necessary are minimal and attainable by many.
You must have been in business for over half a year to close to a year.

The firm has to have a consistent revenue of about 5,000 USD in debit card sales.

No mention of requirements of guarantees but the applicant has to show that they can repay the loan given to them.

With there being no insistence on collateral, merchant cash advance suits a variety of loan seekers including mostly startups, nonprofit making firms and those with low personal credit. However, despite being this utopia of financial burden solution, factoring is expensive with rates as high as up to 30%, and with a daily repayment plan, it affects the cash flow per day, and this mostly affects businesses that plan for their expenses monthly. The rate is affected by among many, these two primary factors; the size of the business and the amount borrowed. It may vary, so it is not a major limiting factor.

Any business that accepts transactions using debit and credit cards are most likely to qualify for the loan, e.g., retail stores. Despite offering majorly small loans, the amount borrowed can exceed half a million dollars.

The major upside to this service is the flexibility of terms on loan and the liberty accorded to the loan seeker to choose whatever they want to use the money for. It is also like a guardian angel to the firms that are just coming up, and by providing them with the necessary funding they require, they can finally grow their business. The ease in which the payment plans are carried out affords the recipients an easy and a stress-free experience. Just about anyone can apply for and qualify for this service which is not the case in traditional bank loans systems where checks ensure people willing and able to repay the loans are considered and takes more time to process.

The benefits outweigh the risks and certainly factoring is a worthy supplement to bank loans. The high rates can be viewed as being necessary especially because of the risk taken by the loan givers.

Important to note
Merchant Cash Advance is a loan service like any other, and so the applicants have to put in thought before applying. Apply for the amounts required and do not be tempted by the liberty accorded. One may easily end up in debt.

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