Why a Merchant Cash Advance May Work for You

Posted by Factor Funding Co. on March 14, 2017

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The financial side of starting a small business is often the most intimidating. Small businesses often fail because of poor financial decisions, and prospective business owners are hesitant to pursue their dreams because they don’t have enough money. However, financials need not stop you from pursuing and fulfilling your entrepreneurship dreams. You have several options, including a merchant cash advance. Many businesses use merchant cash advances when starting out, and find they make financials much simpler.

What is a Merchant Cash Advance?

In a merchant cash advance, businesses receive upfront cash or capital in exchange for a portion or percentage of future sales, particularly credit card sales. A merchant cash advance is not a business loan. You will not have an interest rate or a monthly payment plan. Instead, any merchants lending to you will recoup their funds through the percentage of sales you promised. If you take out a business loan in addition to a merchant cash advance, you will pay expenses related to the loan. The cash advance is not meant to go toward those expenses.

Why Should I Get a Merchant Cash Advance?

Many factors make merchant cash advances appealing. The speed with which you can obtain one is often the deciding factor for business owners. If you decide to put up cash or capital for a merchant cash advance, you can get the money you need within hours of completing an application. Compare this to traditional bank or business loans, which can take days, weeks, or longer to process. Additionally, a merchant cash advance doesn’t require a large lending company. Thus, fewer people must approve your application and advance.

Like everyone else, business owners don’t like dealing with tons of paperwork. The more time you spend on paperwork, the less time you have to grow your business. Merchant cash advances require little to no paperwork. Your time and money can go toward products and services rather than faxing, scanning, or emailing information.

Business owners choose merchant cash advances because they are so flexible. Without a fixed monthly payment, you’ll have more time to pay back capital and cash, and give invested merchants the percentages they expect. A merchant cash advance is particularly helpful if your business has been slow, or if you’re selling a product or service not previously offered in your niche. With a merchant cash advance, you can set up any agreement you want – say, 10% of sales each month. That way, only a small percentage of your earnings is deducted, and your business will grow faster.

Unlike a traditional bank loan, merchant cash advances don’t require good credit. With a merchant cash advance, your business has more room to respond to the local and national economy. Capital is not required for a merchant cash advance, so you don’t have to worry about losing valuable resources if the market dwindles or the local economy takes a dive. In most cash advance arrangements, you can get a lump sum with which to handle short-term business needs. Merchants will work with you and accept the agreed upon percentage of sales no matter your credit score. As your credit improves, you’ll make more payments sooner, and see a great return on investment from your cash advance.

Finally, consider a merchant cash advance if you’ve been turned down for traditional business loans. Merchant cash advances have high approval ratings, which makes it easier for business owners to secure capital, make sales agreements that work for them, and keep their businesses going. Even if your business has struggled for months or years, a merchant cash advance may be the best way to get it back on track. Talk to a cash advance lender who can provide advice based on your specific business’ needs.

merchant cash advance guide