Demystifying Business Financing: Understanding the Merchant Cash Advance
Did you know that you can structure merchant cash advances so that providers receive a percentage of your credit/debit card sales or make fixed withdrawals from your bank account?
If you are a small business owner who is looking for an easy and quick way to get funding, a merchant cash advance may be the solution you need.
With a merchant cash advance, the repayment is based on the success of your business, rather than fixed monthly payments. It’s a great option if you need a flexible repayment schedule.
To help you understand the benefits of this type of business loan, we have put together a guide. Keep reading if you’re ready to find out more.
How Do Merchant Cash Advances Work?
With a merchant cash advance, a lender provides you with a cash advance in exchange for a percentage of your future credit card sales.
This means that the repayment of the advance is based on the success of your business. You will not need to make fixed monthly payments.
To qualify for a merchant cash advance, you will need to have been in operation for at least a year. You will also need to have a stable history of credit card sales.
The lender will review the business’s credit card processing statements to determine the amount of the advance and the repayment terms.
One of the major benefits of a merchant cash advance is that it’s quick and easy to apply for.
There is usually less paperwork and documentation required compared to traditional bank loans. Additionally, the application process can be completed online in a matter of minutes.
Where to Get a Merchant Cash Advance
If you’re a small business owner looking for a way to get startup capital, a merchant cash advance may be a good financing option to consider. Here are some options for where to get a merchant cash advance.
Online Lenders
There are many online lenders that offer merchant cash advances. These lenders typically have a quick and easy application process and can provide funding within a few days.
Credit Card Processors
Some credit card processors, such as Square or PayPal, offer merchant cash advances to their customers. These advances are typically based on your credit card processing history with the company.
Traditional Banks
Some traditional banks also offer merchant cash advances. Keep in mind that traditional banks tend to have more stringent qualification requirements and a longer application process than other options.
Pros of Getting a Merchant Cash Advance
Many businesses choose to get merchant cash advances to fund their organization. If you have a great business plan, here are some top reasons why you should consider getting a merchant cash advance.
Fast and Easy to Apply for
Merchant cash advances typically have a quick and simple application process, with minimal paperwork and documentation required.
This can be especially useful if you need funding fast to get your business idea off the ground.
Flexible Repayment Terms
The repayment schedules for merchant cash advances tend to be more flexible than other types of loans. flexible. Your provider will be able to adapt to the ups and downs of your business.
No Collateral Required
Merchant cash advances typically don’t require collateral. This means that they can be a good option for business owners who don’t have assets to use as collateral or who are hesitant to put their personal assets at risk.
Cons of Getting a Merchant Cash Advance
It is important to understand that there are downsides to getting a merchant cash advance. Here are several reasons why you should think twice before getting one.
High Cost
Merchant cash advances can be expensive, with fees and interest rates that are higher than traditional bank loans. This can make it difficult for some business owners to afford the repayments.
Personal Liability
With a merchant cash advance, the business owner is typically personally liable for the advance. If the business is unable to make the repayments, the lender can go after the owner’s personal assets to recover the money.
Limited Funding
Merchant cash advances typically provide smaller amounts of funding compared to traditional bank loans. This means that they may not be suitable for businesses that need a large injection of capital.
When You Should Consider Getting a Merchant Cash Advance
One situation where you should consider getting a merchant cash advance is when a business needs quick access to cash and doesn’t have the resources to go through the lengthy application process for a traditional business loan.
A merchant cash advance can provide funding within a few days. This makes it a good option for businesses that need to act fast to take advantage of a business opportunity or meet a pressing need.
Another situation when a merchant cash advance might be a good option is when a business has a lot of fluctuation in its sales and needs a flexible repayment schedule.
The repayment of a merchant cash advance is based on a percentage of the business’s credit card sales. Therefore, it can adapt to the needs of your business, providing some financial stability.
Get a Merchant Cash Advance Today
If you are a business owner who needs to increase your cash flow, it can be a great idea to get a merchant cash advance. You’ll be able to get funding quickly and these types of advances typically have flexible repayment terms.
Are you ready to get a small business loan or a business line of credit? If so, keep in mind that Penn Commercial Capital is here to help you. Don’t hesitate to find out more about our loans today!