Almost certainly, lots of you already know what a merchant cash advance is and for those who don’t this article will be a useful source to find out the vital things regarding this issue. So, it should be started with that it is a business loan alternative that is much faster and easier to obtain and requires no collateral. The point is that, many businesses receive a cash advance even after they’ve been turned down for a bank loan.
The other critical detail that is needed to be taken into consideration is that merchant cash advance (or merchant loan) has lots of benefits if compared to a business loan from the bank and some of these advantages are:
1. 95% approval rate
2. Approval within 24 hours
3. Get funded in about a 7 days
4. No collateral required
5. Good credit is not a requirement
6. Receive up to $500K
It should be also mentioned that a merchant loan is not for everyone. You see, the price of one of these is in general much more than a usual business loan. In the case your credit is good, you have substantial equity to use as collateral and you do not need money in a hurry; this may be considered to be the best option for.
You should also know that in many cases, if a business uses their cash advance and invests it into their business the return on their investment far exceeds any cost of paying back the advance within the first 6 months.
The other principal detail that you might wonder about is how does merchant cash advance work. You need to take into account that the amount advanced to your business is based upon the amount of your credit card sales, usually, around two and a half times the amount of your monthly average.
When you agree to the terms, they enable your processor to automatically deduct a small percentage of your daily credit card sales. Every time you batch out a percentage of only your credit card sales go towards paying off the balance. And after about 3 months, you are eligible for extra funds. The standard time it takes to pay back a merchant cash advance is 6 or 7 months.
As you can see, everything is rather straight forward since they tell you exactly how much they are going to advance you, how much it will cost and the percentage of credit card sales they will use to pay off the advance. You will have no surprises as it’s all on paper before you agree to anything.
Let’s have also a few words about creativity. The point is that creativity is not something that is only needed for people occupied with “creative professions.” Creativity is a feature that is required for all types of careers and industries. Being creative helps one to think outside of the box, to separate one’s self from competitors and peers and to get out of sticky situations.
Creativity is a burning quality for an entrepreneur, especially when it comes to business financing, as traditionally used business financing methods have begun to run dry. It is obvious that creatively thinking will help a smart small business owner to come up with the idea of using a merchant cash advance to finance his/her small business.
So, you might ask whether a merchant cash advance transcend traditional ideas, rules, patterns and relationships. The point is that small business owners use bank business loans to acquire the business funds that they need. Generally, small business owners expand relationships with their banks, develop business plan presentations and apply for bank loans. You need also to keep in mind that the merchant cash advance breaks this model, allowing small business owners to get up to $500,000 in unsecured business funds without restrictions on how the money can be used.
There is also a need to add here that a merchant that process at least $3,500 in monthly credit card sales, has owned his/her business for at least six months, has no unresolved bankruptcies and at least one year remaining on the business lease, can receive a merchant cash advance.
In the end, the merchant cash advance repayment method is also very creative. Plainly speaking, rather than making fixed monthly payments, a small percentage of the business’s daily credit card sales is automatically deducted in order to repay the merchant cash advance and this manner allows the repayment amounts to go up and down along with the business’s credit card sales.