Possible Benefits of Merchant Cash Advance
If you have a new business and struggling with cash flow as many start-up companies do, you may have considered a bank loan. Traditional loans tend to take a long time to process and many new business owners would not be approved due to past credit problems.
An alternative to bank loans is a merchant cash advance, which can greatly help new businesses that need more money to put into the business. This type of advance works by the lender giving you a lump sum amount with an agreement that the loan is paid back via a percentage of credit card and debit card purchases made in the future.
Many retail establishments use the merchant cash advance option. It is important to realize that these loans do carry a higher interest rate than a traditional bank loan. However, since it is paid back from future transactions, it often makes it easier for a business to pay.
The payments and percentage paid to the lender changes each month as the sales of the business changes. If one month sales are $5000 and the next month sales gross $10,000, the higher sales month will have a higher loan payment.
Because the cash advance offers such flexibility, it makes it much more convenient for some businesses. A bank loan is a set payment that doesn't fluctuate with the business as a cash advance loan does. This is another reason it us typically quite an attractive option for many newer businesses.
Another important benefit is the loan is processed faster than a bank loan. This means that access to the cash is accessible sooner.
The amount of the loan is normally based on the sales the business has on a monthly basis. Once the lender has access to this information, they will make a determination on the amount of cash you are eligible to borrow.