Merchant Cash Advance – Top Reasons It Is Preferable Over Funding from Bank or a Line of Credit
Are you looking for an immediate business funding? Is the credit crisis slowing down your business? Is a low credit rating preventing you from giving your business the finances it needs? Are you weary of waiting for weeks to get a loan sanctioned? Are you praying for a way to get funds in a quick, straightforward and efficient way? If yes then a merchant cash advance (MCA), also called a business cash advance, is the solution that will finally ease your troubles.
Merchant cash advance offers small and medium-scale businesses a rapid and trouble-free means of acquiring funds for things like maintaining inventory, settling payments in a timely manner and for taking advantage of new opportunities. With merchant cash advance, you exchange a fixed fraction of credit sales for a lump sum of cash. MCA providers charge a set fraction, typically around 8 % of total credit card receipts per month. If the depression induced shaky credit reports or guarantee requirements are stopping you from securing commercial bank loans, then an MCA is most definitely a useful choice for you.
MCA offers various benefits such as described below.
1. No collateral at stake
Merchant cash advance is treated as a purchase or a sales transaction and not a loan. Hence, if you are unable to pay back, it does not impact your business credit rating unlike commercial bank loans that can create chaos in your credit report. You also do not face the threat of losing pledged security, making MCA a comfortable and secure business financing option for your business.
2. Easy application and payment process
Most MCA providers include an application form on their website. The application does not involve entering tax returns, bank statements or business plan as supplementary credentials.
MCA providers base their decision on two factors – monthly credit card sales volumes and longevity of business – to judge your suitability for receiving the advance and calculating the value. Typically, you should see monthly credit card sales amounting to at least $5000 and a minimum of nine to twelve months in business to be considered for for this type of loan.
3. Quick turnaround
Merchant cash advance being a minimum paperwork deal promises very fast turnaround time. With MCA, the advanced amount will be usually transferred to your account in 4-6 days from submitting the request. Unlike conventional bank loans, you do not need to wait for weeks or months, preventing you from settling your bills, buying inventory, paying your employees and maximizing on emerging opportunities.
4. Good approval rate
MCA providers place more value on your current performance rather than credit history. This allows any stable business irrespective of the past to procure a loan without hassles. Your average credit card sales in the last few months will be factored into calculating the approved MCA funding amount.
5. Revenue-based collections
Unlike traditional bank loans with fixed monthly payments, MCA links repayments directly with your monthly credit card sales. You must pay a fixed fraction of your monthly sales. When your business is booming you pay more. When your business slackens, you are asked to pay lower sums. Thus, at no point does MCA repayments become an unmanageable financial liability on your business, draining all its funds.
While these benefits are significant, MCA gives you much more. It gives you a competitive advantage by allowing you to avail growth opportunities without losing precious time. In business, losing time is losing money. If you keep waiting for a bank loan to get approved, you are working against your business interest. Choosing a merchant cash advance over a conventional loan can allow your business to grow and flourish. Daljeet Sidhu is the author of this article.
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