The Merchant Cash Advance Industry
Merchant cash advance services have become popular in the last few years with many small businesses using them as a way of financing their businesses especially on short notice. For anyone looking to use them as a means of financing their business, it is important to at least understand the basics of merchant cash advance. The following is a small break down of what exactly this type of financing entails.
What is it?
In simple definition, a merchant cash advance is an agreement where a merchant cash advance company agrees to give a business a specified amount of money in exchange for a percentage of future credit or debit card sales.
This type of cash advance service provides a good alternative for businesses to acquire money especially when they are not eligible for loans from banks.
How does it work?
Once a business approaches a merchant cash advance company and they agree to advance the business some money. The company will make arrangements with the bank that the business transacts with to make a standing order where a certain percentage of all credit card or debit card sales will be transferred to their bank account until the sum advanced and interest is fully paid off.
Because the merchant cash advance company is entitled to a certain percentage of all credit card sales, some people argue that merchant cash advance loans are not really loans but rather are a sale of profits i.e. the company buys the profits of the business for a certain lump sum rather than that the company loans the business money.
This type of service allows small businesses to acquire money on short notice whenever they need it. This means that businesses no longer have to miss great investment opportunities because they lack the proper credit at the time that the investment opportunity presents itself.
One great thing about this cash advance service is the fact that it has a high approval rate therefore businesses that are doing relatively well have a high chance of getting the cash they need in advance. Apart from that, it has an easy application and approval process which takes a very short time.
Another advantage is the fact that there is no collateral needed for you to be eligible to get the advance money. Therefore there is no risk of the businesses losing any of its assets.
Merchant cash advance companies offer a good payment method. The businesses only get to pay back the money they owe when they get paid themselves. There is no undue pressure or deadline that can put pressure on the business.
This type of businesses offers high interest rates. For this reason most people only use merchant cash advance services when they have no cheaper alternatives like bank loans.
Small businesses that have not getting credit card sales on a regular basis may not be entitled to merchant cash advance loans because the merchant cash advance companies depend on credit card sales for the payment of their money.
A merchant cash advance is an easy and quick way to receive working cash for business needs. Whether you want to carry out that business expansion you’ve always wanted, need to make payroll or require a little extra assistance with bills, a merchant cash advance can help.
The cash-advance application and approval process is much faster than a conventional bank loan, usually delivering money to your account within just a few days. You don’t need collateral, and repayment is also easier than with a loan because it comes directly from your daily credit card sales. There’s no need to make a specific target payment each month.
Qualifying for this type of advance is uncomplicated. If the business has been open for a certain period of time, only a few months in many cases, and it surpasses a specified level of credit card sales each month, approval may be just days away. The greater the volume of monthly credit card sales, the greater the cash advance the business can receive. The owner simply applies and presents a few supporting documents, including bank statements and credit card transaction statements.
Once the merchant cash advance has been transferred to the business bank account, repayment occurs automatically. The lender deducts a prearranged percentage of credit receipts each day until the entire amount is repaid, including the fee for the cash advance service. Since the payment is based solely on receipts, there’s no need to worry about managing a high loan payment during a slow sales period.
With such an advance, both necessities and dreams are within reach. You can purchase new equipment or develop additional service offerings, and unexpected expenses are no longer a headache. The process is easy, quick and almost effortless. A merchant cash advance can open the door to new possibilities that are only a few short days away.