A merchant cash advance can help your business out of a difficult financial period. If you meet a few requirements for approval you can get the money you need quickly and focus on the task at hand; running your business. The benefits of a cash advance are straightforward, but a savvy borrower also finds value in the details. The article will look at merchant cash advances from both angles; the widely known benefits as well as the overlooked yet helpful details every borrower should explore.
The Top Three Benefits Everyone’s Talking About
1- Unrestricted quick cash –
Advances are part of the reason this term exists. If you are approved, you typically receive your funds very quickly. Some lenders disseminate the money on site. Online resources take 24 hours to process your request. On occasion, the approval process may take longer, but everything usually processes in less than a week. There are no restrictions on how you can use the money. Use it on any type of expenditure that benefits your business.
2- No credit check –
This is an attractive feature for business owners with poor or limited credit, but don’t be lulled into a false sense of security. You still have to show verifiable proof of income that falls within the acceptable approval range.
3- Simple application process –
This is another aspect of the merchant cash advance that appeals to businesses. The application is fast, relatively free of complexities, and getting your documentation in order ahead of time expedites the approval.
The Details of Loan Retail
We’ve spent a fair amount of time discussing the benefits of a merchant cash advance, but as they say, the devil is in the details and there are some lender red flags to watch for.
The best thing you can do for your business is to research your lending options carefully. Avoid “no fax” lenders that don’t require documentation, overcharge, or refuse to disclose the terms of your agreement. If you think something doesn’t look or sound right, shop around before you sign anything. It’s better to learn by doing a little footwork than by relying on your hind’s sight. The internet seems to be a staple of the current business culture; cash advance companies have joined the club. While borrowers like the convenience, speed and accessibility of e-commerce lending; it’s important that the process is still handled properly. Be aware that there is a higher margin of error when completing a web-based transaction as opposed to using a more traditional method. Monitor the process from the time you’re approved to the time the funds are deposited and the fees paid. If a mistake occurs report it right away so corrective measures can be taken. Online transactions happen at lightning speed, but recouping false charges takes up to 72 hours. Don’t get too caught up in the pace set by the lending company. Take time to review all terms and costs associated with the agreement. The final decision is yours, so make it a wise one.
Frequently Asked Questions
What is a merchant cash advance and how does it work?
A merchant cash advance (MCA) provides businesses with a lump sum of capital in exchange for a percentage of future sales. Unlike traditional loans, MCAs are repaid through a set percentage of future sales, which can be calculated weekly, bi-weekly, and even monthly, making payments flexible and aligned with revenue fluctuations. This structure allows businesses to manage repayments more effectively during varying sales cycles.
What are the primary benefits of obtaining a merchant cash advance?
MCAs offer several advantages, including quick access to funds, often as fast as 3 to 4 hours, and a straightforward application process with minimal documentation. The flexibility in repayment terms, tied directly to sales volume, ensures that payments adjust according to the business’s cash flow.
Are there any potential drawbacks to consider with merchant cash advances?
While MCAs provide rapid funding, they often come with higher costs compared to traditional financing options. The factor rates can lead to annual percentage rates (APRs) that are significantly higher, impacting overall profitability. It’s crucial for business owners to thoroughly understand the terms and ensure that the cost of the advance aligns with their financial capabilities and goals.
How can I ensure I'm choosing a reputable merchant cash advance provider?
To select a trustworthy MCA provider, research multiple lenders and compare their terms, fees, and customer reviews. Avoid lenders that lack transparency, overcharge, or refuse to disclose the full terms of the agreement. It’s advisable to consult with financial advisors or peers who have experience with MCAs to gain insights and recommendations.
