Summary: Many a time, businesses need immediate funding without possessing a great credit score or collateral. With a merchant cash advance, there is hope for small businesses and startups.
Suitable for a wide range of businesses, merchant cash advance financing is a flexible funding option designed to ensure that merchants get the cash they need. This concept is fairly new but has already become quite popular in the business sector. Read on to find out why.
Features of a Merchant Cash Advance
Unlike traditional financial institutions, a merchant cash advance provides funds for businesses that have temporary credit needs. Based on the Point of Sale receipts, an entrepreneur will be able to receive a certain amount of cash. The entire process is simple, uncomplicated, and completed very quickly. Approval may be gained anywhere from 3 –7 days. Both the lender and the merchant will come to an agreement as to the repayment terms and tenure. Flexible and stress-free, the amount to be paid back will depend on how the business is doing. The entire advance amount needs to be paid in full within this time period. For every business owner, time is critical during a financial crunch or need. With a cash advance, you will receive the cash immediately without losing out on too much time. As an added bonus, one can avail of an advance without collateral as well as choose to avail of financial help from other lenders simultaneously.
Points to Remember Before You Invest
Before you do decide to choose cash advance funding, there are certain points to keep in mind. Although your credit score is not a criterion, the lender may have to investigate your credit history to understand your repayment habits. A hard credit check can negatively affect your business’s future credit score. Since this type of ending does not have a fixed structure, it is regulated by a Uniform Commercial code that differs in each state. Daily repayment can affect the cash flow of your business, and if you ever do make the full repayment before the decided tenure, don’t expect savings on your interest. While you do get immediate funding, remember that the merchant cash advance business may charge a high percentage rate, but its advantages offset the cost in the long run.
Applying for Merchant Cash Advance
Therefore, to begin the process, you need to fill out an application form and provide certain necessary documents. Next, the merchant will have to submit proof of citizenship, a copy of the lease, and bank statements. Finally, sit tight and wait for the approval that could come in less than 24 hours. Sometimes switching the credit card processor will be necessary to avail funding. Once the amount is decided, both the lender and the merchant will have to decide on details such as payback amount, holdback percentage, advance amount, and terms of the advance. After the disbursal of funds, the entire process of repayment automatically begins through the merchant’s account.
Merchant cash advance lenders look for applicants that have a stable business, a minimum annual turnover, and one that has been using credit cards for a while.