Are you looking for a quick loan option? Is the economic recession retarding business growth? Is a poor credit rating stopping you from acquiring the finances it requires? Are you exhausted by the rigmarole involved in getting a loan sanctioned? Do you want to procure cash in a speedy, simple and efficient manner? If yes then a merchant cash advance (MCA), also called a business cash advance, is the answer that will finally ease your troubles.
Merchant cash advance offers small and medium-scale businesses a quick and straightforward way to procure money for things like sustaining every day operations, settling invoices in a timely manner and for expanding the business. With merchant cash advance, you trade credit sales for an advance of cash. MCA providers charge you a fixed percentage, usually about 8 percent of total credit card sales in a month. If the downturn induced poor credit scores or guarantee prerequisites are stopping you from applying for bank loans, then an MCA is particularly a helpful option for you.
MCA offers various advantages such as described below.
1. No collateral at stake
Merchant cash advance is treated as a purchase or a sales transaction and not a loan. Hence, if you are unable to pay back, it does not hurt your credit score which is certainly not the case with business loans that can leave a lasting mark on your credit report. This also removes the threat of losing pledged security, making MCA an extremely safe business financing alternative for your business.
2. Trouble-free application and disbursement process
Most MCA providers include an application form on their website. Filling the application is quite simple as it does not involve entering tax returns, financial statements or business plan as supplementary documentation.
MCA providers simply rely on two factors – monthly credit card sales volumes and longevity of business – to appraise your worthiness for receiving the advance and calculating the value. Typically, you should have monthly credit card sales of over $5000 and more than nine to twelve months in business to be considered for funding.
3. Speedy turnaround
Since merchant cash advance requires little paperwork, the application turnaround time is very small. In fact, the advanced amount will be typically credited to your account within a week of submitting the application. Unlike traditional bank loans, you do not need to wait for weeks or months, preventing you from paying your bills, paying your employees, buying inventory and capitalizing on emerging opportunities.
4. High approval rate
MCA vendors value your current business performance over credit score. Even if you haven’t got a very good past record you can still procure a loan without being discredited for a poor credit report. Your average credit card receipts in the last few months will be factored into calculating your MCA funding amount.
5. Revenue-based payments
Unlike customary bank loans with set monthly installments, MCA payments synchronize with your monthly credit card sales. You an unchanging proportion of your monthly credit card receipts. When your business is thriving you pay more. When your business is going through a lean period, you automatically pay lower amounts. Thus, at no point does MCA repayments become an unmanageable fiscal liability on your business, draining all its funds.
In addition to these benefits, MCA gives you a competitive advantage by enabling you to take advantage of emerging opportunities without losing precious time. In business, losing time is losing money. If you keep waiting for a bank loan to get approved, you are working against your business interest. Opting for a merchant cash advance over a conventional loan can help you to pursue your business goals. Daljeet Sidhu is the author of this article.
