Merchant Cash Advance Basics
Whatever business you are in, you want to make sure you have the capital on hand to pay your employees, fix the infrastructure of your company and finance improvements as needed. For many businesses, especially newer ones, this can be a big challenge, and can spell the difference between success and failure. In some cases, a merchant cash advance can be a good solution.
The characteristics of this type of financing have several distinct advantages. First, it is quick, and can result in increased cash flow in a about a week, whereas some loans can take a month or more for approval. There also tends to be less paperwork required. You might only need your driver’s license, bank statements, a voided check and a tax return. A business with little or no credit, or even poor credit, can be approved for a merchant cash advance.
It is also fairly versatile and can be adapted to the needs of many types of business. For example, it can be tied to credit card transactions, with repayment being made a little at a time with each transaction. This can work well with restaurants and other businesses that have a lot of daily transactions. Repayments are then automatically set up to coincide with how busy you are. You pay back more when you are busy, and less when business is slow. Loan amounts can vary from as little ss $2,500 to as high as $250,000.
A merchant cash advance does come with some drawbacks. Perhaps foremost is that the interest rate for these types of loans can be high. This can result in reduced cash flow for the business, especially if repayment is tied to credit transactions. There also might be higher fees than with other more traditional loans, and it might be more difficult to change merchant service providers.
Even though this type of financing is easier to get than others, it still does have some basic expectations. Usually a company needs to be in business for a couple of years, have annual revenues approaching $200,000, and have a moderate credit score. These are not hard and fast guidelines, and may be altered depending upon the merchant advance provider.
Cash Flow Solution
A merchant cash advance can be the right solution for your company. It can keep your cash flowing in good times and in bad. It might be able to protect your business from unexpected problems and pave the way to a bright future.