A Beginner’s Guide to Merchant Cash Advance
Most small businesses begin with a sizable loan. As you pay off your debts and grow your business, there may be additional financial bumps in the road. Instead of taking on more debt to pay for unexpected bills, emergency equipment repairs or to balance your cash flow issue, find out how a merchant cash advance can provide you with the financing you need. Keep your business moving forward with this competitive financing option today.
Unlike a business loan, your cash advance doesn’t come with interest rates, lengthy application or credit score hurdles. In order to receive a cash advance, you simply have to have a history of receiving credit card payments. Whether you provide online services or operate a brick-and-mortar storefront, a history of credit card transactions allows your creditor to estimate your future sales.
From there, you’ll receive an advance on your future sales. The exact terms of the advance depending on your particular situation and financial needs. Your lender will automatically withdraw a set percentage of your monthly credit card payments in order to pay off the advance.
This strategy has a few advantages over traditional lending. First, because the monthly payment is a percentage of your credit card sales, you won’t have to worry about affording your next bill. A sudden slow month in sales won’t leave you unable to pay, you’ll still pay the same fixed percentage.
A merchant cash advance relies primarily on the likelihood that you’ll continue to receive credit card payments, so you’ll need your financial history in order to apply. However, a cash advance requires far less history than a traditional bank loan.
For businesses that require a major advance, you’ll need to offer a large percentage of future sales and have a more firm financial history. A more manageable advance is convenient to apply for and easier to receive than a business loan. Don’t let your company’s short history or your low credit score keep you from receiving the financing you need.
Use your advance for any spending you wish. Just like credit card income, your cash advance can be used for payroll, paying bills, investing or purchasing inventory for your business. Anyway, you’d spend your actual income you can choose to spend your advance. Don’t wait for your credit card sales to be processed, but enjoy a fast, flexible way to boost your current working capital and maintain a steady upward growth trend with your small business.