There are a lot of ways you can get funding for your business. While a traditional loan from a bank is the most common, it is not always the best option for small businesses. Looking into alternative funding can help you get the financing you need within your business limitations. One option for alternative funding is a merchant cash advance.
The Basics of a Merchant Cash Advance
A merchant cash advance is an alternative funding opportunity for businesses. Rather than obtaining a loan, which is a set amount from a financial institution paid back on a pre-determined payment schedule, a merchant cash advance utilizes future sales. Your business sells part of future credit card sales at a discount. Your company receives a lump sum of money for those future sales, and the provider takes a portion of future sales until the lump sum and related fees have been repaid.
The Advantages of a Merchant Cash Advance
There are several advantages to a merchant cash advance, especially in comparison to a traditional bank loan. Some of these advantages include:
- Collateral and credit are not necessary, making it a good alternative for businesses with less-than-perfect credit or no collateralÂ
- Fast application process, so you do not have to wait for a long time to know whether or not you have access to the fundingÂ
- Fast access to cash, which is beneficial for paying bills or dealing with other financial needsÂ
- High approval rate for applications, since terms can be negotiated for approval rather than an automatic denial of there are problemsÂ
- Collections are based on revenue, which keeps your business from over-extending the budget to make a payment during a slow sales month Â
Whether you need funding to grow your business or maintain operations, a merchant cash advance can be an effective and beneficial alternative to traditional bank loans. By capitalizing on its advantages, you can the funding to achieve your business goals.
