What Are Merchant Cash Advances

These days, many people are having trouble with their finances and find it hard to sustain a stable financial situation. The month-to-month struggle with regular payment and emergency bills are not something only individuals have to face. Nowadays, there are many small businesses that go through tough times on a regular basis.

merchant cash advance may just be the right solution for your problems
merchant cash advance may just be the right solution for your problems

When a small business owner has trouble paying his employees, not to mention when he wants to expand that business but simply does not have enough funds to do so, usually the only way to keep the business running and growing is by taking out some form of financial assistance. For many small business owners out there, there is one specific type of funding that stands out and that is merchant cash advance.

If you own a small business and you are going through a tough financial period, taking out a merchant cash advance may just be the right solution for your problems. Whenever a financial decision has to be made, the knowledge you have of your options is essential. This is why in order to make your life a bit easier, we are going to explain what a merchant cash advance is and how it can benefit your small business. So if a time for it comes, you will have better judgment of whether a merchant cash advance is the answer to your financial troubles or not.

What is a merchant cash advance?

Merchant cash advances, also referred to as credit card funding
Merchant cash advances, also referred to as credit card funding

Merchant cash advances, also referred to as credit card funding, are one of the most popular financial funding tools for funding small businesses. Normally, a merchant cash advance is a quick, simple and very efficient way to breathe life into your small business. In order to be eligible for a merchant cash advance, your small business should have a credit card sales volume that is rather easy to predict. Every merchant cash advance company is going to offer you different merchant cash advance terms. However, with each merchant cash advance company, these terms will be mainly dependent on how stable your credit card sales volume is.

Normally, the process of merchant cash advance funding goes like this: the merchant cash advance company purchases a fixed sum of your future credit card receipts at a certain discount. After that, the merchant cash advance company grants you a loan in an amount that usually can go up to $170,000. Then the merchant cash advance company gets a percentage of your future credit card sales. The percentage that the merchant cash advance company takes must be fixed.

Before deciding on a merchant cash advance, it is always going to be better if you do research
Before deciding on a merchant cash advance, it is always going to be better if you do research

The merchant cash advance company is going to receive that percentage of your credit card sales until the merchant cash advance is fully repaid. Before deciding on a merchant cash advance company to work with, it is always going to be better if you do research, make a list of different merchant cash advance companies that more or less are offering terms that fit your specific financial situation, and narrow down that list until you pick the best merchant cash advance provider.

Once you have chosen a merchant cash advance provider to work with, you will have to go through the merchant cash advance application process. The application process for a merchant cash advance is fairly fast, as it would normally take no more than two weeks to go through the whole process. Other thing you should know about merchant cash advances and the companies that provide this service is that many merchant cash advance companies do not care and have no say in the exact ways you are going to spend the money that you are getting from them.

And since you are the person who knows best the situation of your small business is in, you will be able to fund it exactly as you deem fit. While it is true that a merchant cash advance can usually be more expensive than some of the alternatives that small business owners can choose from, a merchant cash advance is most likely the service that can get your small business going in no time and also give it the opportunity to gain momentum and continue its development.

Advantages of merchant cash advances

If you still have not made up your mind on whether a merchant cash advance is the right solution for your financial struggles, here are some advantages that merchant cash advances have to offer:

 

  • The service is really fast compared to other funding methods for small business

the service is really fast
the service is really fast

Much like with some small business loans or credit lines, when you decide to apply for a merchant cash advance, the whole process normally does not take more than a couple of weeks. Adding to that, you have the option to go through the whole process online. That means that you may be able to get hold of the funds you need without even having to leave the comfort of your home.

  • Having a stellar credit score is not an absolute requirement

If you have tried taking out a business loan from a traditional loan lending institution in the past, you would know that getting such loan is usually only possible if your credit score is perfect or close to perfect. With merchant cash advances, the situation is a bit different. The companies that provide this service are not really that interested in the state of your credit score, but rather in your ability to pay back the loan they are going to give you based mainly on your credit card sales and their consistency. Having said that, you should keep in mind that using a merchant cash advance will not really help in building your credit. The reason is that many merchant cash advance companies do not send any reports to the credit bureaus.

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