When you own a small business, it’s very important to pick the right financing option in times of need, like a merchant cash advance. Choose the right one, and you can help your business thrive. Choose the wrong one, and your business could be in serious trouble.
If you don’t know enough about this financing option, then you might want to find out why get a merchant cash advance? And if that still doesn’t give you a concrete answer, then keep reading to find out 5 reasons to go for a merchant cash advance loan.
Reason For Merchant Cash Advance #1: Your Small Business Needs Money
Obviously, no one gets loans just for the sake of getting a loan; they all need it. However, some reasons are better than others, and some are urgent, while others are merely important. If your business falls into the “urgent” category, then you need capital fast. You can’t wait and hope for income to arrive, ask a friend for a loan, or apply for no credit check small business loans, hoping they will accept your application.
Fast money that comes with reasonable repayments is difficult to find, especially when it comes to financing your business, but that is exactly what a merchant cash advance can offer. It’s not a loan; it's an advance out of money your business will be making anyway. That already is a change of status. For more advice on financing your business, access the Gov.uk page.
Reason For Merchant Cash Advance #2: The Application Process Is Quick
When the business is in urgent need of capital, you don’t have a lot of time to waste, waiting for your application to be processed and then wait another few days to get your money. For a small business, that prolonged waiting time typical of regular small business loans can make it or a break it.
With a merchant cash advance, the application process is quick and easy. All you need to do is fill in an application (no more than 2-3 pages), provide the necessary paperwork, and your application can be approved as quickly as one day later. Other times, it may take longer, but never more than a few days. Usually, the money takes two days to reach your account.
Reason For Merchant Cash Advance #3: You Don’t Need Collateral
A major problem with business loans is that you need collateral, which is why people opt for unsecured business loans. But even so, you would still need to repay a higher amount, and in fixed monthly instalments that you may or may not be able to afford.
A cash merchant loan does not require collateral because the provider has access to your business account. Because of the way the loan is set up, the provider accesses your account every day to collect their percentage of the day’s credit card receipts or receivables.
That gives the lender the security they need, so they don’t have to ask you to put an asset up for collateral. The borrower is not the one in charge of the payments (or at least, not all of them), because the percentage is taken out of the account automatically by the lender.
Reason For Merchant Cash Advance #4: It Doesn’t Have High Credit Requirements
Another issue small businesses are confronted with is the fact that companies ask for high credit requirements for unsecured business loans. Businesses that are just starting out or aren’t the most successful will encounter a problem, here, and may not be able to get approved for any kind of loan, especially if they have no collateral for a secured loan.
A merchant cash loan does not require collateral, because they get the necessary security in other ways. Because they take the money daily from your account automatically, they have access all the time, and they don't run the risk of having you default on the payments. Thus, there is no reason why you can't get money without collateral and with bad credit.
Reason For Merchant Cash Advance #5: The Repayment Is A Daily Sales Percentage
When you get business short term loans with no credit check, not only is the interest high, but you also pay fixed monthly amounts. If your business goes well, you will be able to afford the repayments, but what happens if sales are flat and you don’t make enough one month, or longer? Repaying that fixed amount becomes difficult and stressful.
A merchant cash advance is repaid in fixed percentages every day. So, a percentage of whatever you make that day in sales paid with credit cards, for example. That means that if you have some slow days, you only pay that fixed percentage of whatever you make that day, not a fixed amount that you may not be able to afford. And when business is thriving, and you make a lot of sales in one day, the percentage is the same, but the corresponding amount will be higher, which means that the total amount is paid off earlier.
All in all, merchant cash advance loans are a wonderful option for small businesses that need financing. While there are other options available on the market, they tend to be expensive and demanding, without providing the same kind of advantages. An advance allows you to get the money you need quickly and repay according to the sales you make, so you never risk running out of money in order to repay the advance.
|Merchant Cash Advance Loans FAQs|
|What are merchant cash advance loans?||A merchant cash advance loan is not actually a loan, but an advance for your small business. The money is essentially given to you as an advance from your future sales.|
|Who can get merchant cash advance loans?||In order to get a merchant cash advance, you don’t need good credit, but you do need many credit card transactions in a month. In addition, you should be able to justify the relatively high expense necessary to get this advance.|
|How do you repay the advance?||The advance is repaid with interest, that is usually between 20% and 30%. That is the total amount to be repaid. Then, you have the daily holdback percentage, which is the daily percentage to be taken from your sales, which will contribute to paying off the total amount.|