What is a Merchant Cash Advance?
At one point or another, every business owner needs quick funding to inject into their business. The merchant cash advance was designed to offer a solution to small businesses in need of quick funding. Technically, a merchant cash advance is not a loan; it’s simply a cash advance against your future business sales. As a small business owner that needs quick funding for a business project, you can get the sum of money you need and pay it back daily as a percentage of your daily credit-card sales.
Merchant cash advances have become the go-to quick financing option for business owners, because the loans have fewer requirements for approval. Before approving your loan, a merchant cash advance approval officer will check your business sales to determine whether you can pay back your loan in time. A merchant cash advance might seem a fast funding option for small businesses, but it does come with drawbacks.
How a Merchant Cash Advance Works
A merchant cash advance is different from other financing options. Prior to funding, an agreement is reached between the business owner and the merchant cash advance provider. This agreement will highlight the advance amount, its repayment terms, ROI and monthly payback. The terms depend on the amount of money you want to borrow in advance. Once you agree to the terms and conditions, the application for the advance cash can follow.
Upon approval of the loan, a sum of cash will be paid into your business account against your future credit card sales. The cash advance and agreed interest will be deducted daily as a percentage cut of your credit-card sales. This implies you won’t have to wait long before you pay back a merchant cash advance, as repayment automatically begins based on your daily sales.
The time required for you to pay back a merchant cash advance depends on your daily business transactions. If your credit-card transaction go well, you can repay the cash advance within a relatively short time.
Benefits of a Merchant Cash Advance
The flexibility of merchant cash advance is a common reason why businesses prefer opt for them. It is life-made-easy for small business owners that are looking to inject quick funding into their business. There is no specified duration of time within which you must repay the money you borrow, unlike most other types of loan.
High Borrowing Limit
With a merchant cash advance, you have the option to borrow a huge sum of money, depending on the performance of your credit-card sales. If your business is doing well in terms of sales, you could be approved for a large cash advance. In that case, it’ll also be easier for you to repay the money.
No Stringent Application Process
A merchant cash advance requires no rigorous application process, unlike most fixed-payment loans. You’re not required to too many documents or provide collateral before you can obtain the loan. All that is required of you is to have an existing business credit card, which the merchant cash advance provider will inspect to gauge the performance of your business.
Easy and Quick Approval
A merchant cash advance is simple to obtain. It is a common financing option for businesses in need of quick funding. Once you have the required personal and business credit card scores, your cash advance approval should be fast.
Easy Repayment Terms
The repayment term associated with merchant cash advance is relatively easy. You won’t be forced to repay your loan within a stipulated period of time. The repayment option requires a certain agreed percentage of your daily credit card transaction/sales to be deducted by your merchant cash advance provider. The deduction will also include the loan fee or interest. This would be done till you repay the loan in full.
Downsides of the Merchant Cash Advance
Cash Advance Depends Solely on Your Business Performance
The amount you can borrow through a merchant cash advance depends solely on the strength of your credit-card sales. This implies that if you’re running a small business and want to expand your business, you might find it difficult to get a huge merchant cash advance unless you can prove that you’ll get consistent sales after the loan. A merchant cash advance approval depends solely on the performance of your business.
Daunting Interest Rate
The merchant cash advance is known for its daunting interest rate. This is one reason why business owners run away from it. The annual percentage rate of a merchant cash advance can be as high as 350 percent, though it often starts at around 40 percent. This rate depends on the cash advance provider.
Repayment Schedule Affects Your Credit Card
If you’re intending to build your business credit, obtaining a merchant cash advance could be a non-favorable option. Merchant cash advance terms state that a certain percentage of money will be deducted from your credit card sales daily, so this will affect your business credit card’s credit score. A bad credit card score could affect the growth of your business. It might make it difficult for you to source working capital in the future.
Repayment Schedule Can Affect Budgeting
With the repayment option associated with a merchant cash advance, it might be difficult for you to keep to a budget. It can lead to a shortage of working capital, as money will be deducted from your account daily. In turn, this can affect the performance of your business.
When should you opt for a Merchant Cash Advance?
It is often advisable to obtain a merchant cash advance only if you need quick access to funding, probably to take advantage of a business opportunity. There might be an ongoing discount to get some required items or inventory for your business – and in that case, you can obtain a merchant cash advance to benefit from the opportunity. It is not advisable to obtain a merchant cash advance for a long-term business project.
Apply for a Merchant Cash Advance from Globelend Capital
At Globelend Capital, we offer amazing merchant cash advances, ranging from $25,000 to $500,000. We know how important it is for small businesses to have unlimited access to quick loans to support business growth. This is why we offer simple, streamlined merchant cash advances to help businesses improve.
Our merchant cash advance comes with an affordable interest rate. Our simplicity and life-made-easy transparency, among other benefits, are what we boast about. With a Globelend Capital merchant cash advance, you can easily grow your business. In no time, you’ll have your cash advance approved. In less than 10 days, it’ll be paid directly into your business account. Apply now to enjoy our outstanding merchant cash advance offer!