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What is a Merchant Cash Advance and How Does It Work |
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As a business owner, you have probably heard about merchant cash advances but you might not fully understand how they work. |
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| Author: Jennaentrust |
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What is the difference between a business cash advance and a bank loan?
Approval rate – Cash advances have higher approval rates when compared with a loan from a bank. If you own a small or medium enterprise, you will find that it has become increasingly difficult to meet all the qualifications necessary to receive a bank loan. And even if you do, banks may still have arbitrary reasons for turning down funding for your business, such as the type of business you run. On the other hand, getting a business cash advanceis a lot easier for many type of businesses – especially new and growing companies.
The reason why MCA providers have a higher approval rate thank banks is because they know how to minimize the risks when offering funds to small businesses.
Funding – Merchant cash advance providers are generally able to fund small businesses within the same week that the businesses are approved for a cash advance. The money can be used for any business related expense, such as equipment, payroll, marketing, sales, and more. To see an estimate of how much your business is qualified to receive, use this calculator.
Collateral – Merchant cash advance providers do not require collateral from you as a business owner. Banks, however, usually require some form of collateral from you so they’ll have something to go after if you are unable to pay the loan – which could mean your house or other assets. With a business cash advance, not only is collateral not required, but your credit rating is also not a determining factor in whether or not your business can receive a cash advance.
Repayment – You pay back the merchant cash advance lender via a fixed percentage of your daily credit card receivables plus a small fee. This means that the money is automatically deducted from your credit card transactions so you never have to write a check. This type of repayment is also known as credit card factoring. With merchant cash advances, there is no fixed term of repayment – so you pay more when business is booming and less when your sales are slow.
Small companies also need a chance to prove their capabilities in today’s unstable economy, but when bank loans are hard to receive, their options might be limited. However, with the additional working capital they can receive via a business cash advance, they may be able to raise their monthly sales and even build a bigger and more powerful company. This is what merchant cash advance lenders offer to small business owners. They help you get your business back on its feet while they also earn a small percentage from your credit card sales without seizing anything on your behalf. The process is beneficial for both the small business as well as the cash advance provider.
About Author
Does your small business need funding? Check out Entrust Cash Advance for a business cash advance or other cash for business options.
Article Source:
http://www.1888articles.com/author-jennaentrust-45574.html
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