When you want to increase cash flow into you business within a short period of time, merchant cash advance can be a good solution to your problem. Merchant cash advance will give you a quick cash boost. A merchant cash advance is not a loan per se. It is a an advance based on the future credit sales or revenues of the business. Your provider will evaluate your business’s ability to generate the required revenue needed when processing the loan. In most cases, the provider will look at daily credit card receipts or receivables to determine if the business is in a position to make timely payment. In essence, the business sells a portion of its future income to acquire a cash boost or capital.

How Does Merchant Cash Advance Work?

Merchant Cash Advance
Merchant Cash Advance

The working principle of cash advance is that you give up a portion of your business against your future earnings or receivables. The merchant will give you a lump sum to boost your business operation and this will be repaid automatically from credit receipts and daily sales with interest that you agreed with your merchant. The percentage is commonly called retrieval rate or holdback and it varies from one lender to another. It is essential that you conduct thorough research to ascertain the right lender who will give you better interest rates and you are comfortable with the charges. The repayment period varies from one lender to another and from state to another. You should ask the customer support team about the terms and conditions before signing up the documents. Repayment process usually begins as soon as cash receivables reflect on your account. The amount that you can borrow is determined by average credit card sales. Your merchant will evaluate your sales over a period to determine your business pattern.


Advantages of Using Merchant Cash Advance

Merchant cash advance has numerous benefits for a businessperson and it is crucial that you assess your financial position before you proceed to get a loan. When considering taking out a merchant cash advance, consider the following benefits:

  • Straightforward Application Process

Just like any other small business loans, the process is simple. You can do the process entirely online and you do not have to visit local stores. You can complete the form by uploading relevant documentation and you will get evaluation from your merchant as soon as they assess your business.

  • Quick Funding

One of the main benefits of merchant cash advance is that there is a high potential of quick approval and funding. Once you have provided your information, the lender will assess your financial position and the amount of loan that your business can support. Advance providers will give you a decision quickly.

  • You Do Not Need To Have Stellar Credit Rating
No Collateral Required
No Collateral Required

Many business people are finding it a challenge to upkeep their businesses because they do not have enough cash boost to increase sales and enhance their stock. With merchant cash advance, you can improve your business. Moreover, you do not need to have perfect credit history. Your eligibility is solely dependent on the consistency of the cash sales and how long your business has been in operation. These determining factors are essential because it will help the lender determine if your can repay the loan on time. However, it is essential to note that cash advance will not help you build good credit history because the lender will not report them to credit bureaus.

  • No Collateral Required

When you approach conventional lending stores for a loan, the first thing that they will ask for is a collateral. A collateral is an item that the lender will sell if the borrower fails to repay the loan on time. In most cases, it serves as an assurance for lenders. In case you fail to repay it, your item will be sold to recover the money.

  • Easier Repayment Process

You cannot take out a loan that will make your repayment a difficult one. You should look at different aspects of the loan before you opt for the loan. Choose a lender who will give you affordable rates and this will help you budget your expenses effectively. Merchant advance allows the borrowers to repay their loans from the cash credit sales. Therefore, you are not worried as long as you are in business and making some money. The lender will deduct the agreed amount from the cash sales.

  • Better Borrowing Limits

It is vital to note that most payday loans and bad credit loans are small amounts that are meant to tide you through to the next pay date. However, merchant cash advance can be of higher amounts for you to expand your business.  

Quick Cash Boost for Business

Merchant cash advance is suitable for a business that requires a quick cash boost and will increase its revenue if they expand or improve on certain sectors. Moreover, it is better for firms that have an established credit card transaction history. The common methods of cash advance payment is advance payments. Here, you are given a sum of money upfront and you will be required to repay on a daily, weekly or monthly basis depending on the agreement with your lender. On the other hand, the most common form involves cash sales and credit reports. Here, your lender will deduct the agreed amount from your credit sales. Financial experts recommend that when you are looking for a loan, go for a loan that has business friendly terms. With such a loan, you can repay the loan on time and still conduct business as usual.

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