Why You Should Try a Merchant Cash Advance
An alternative method of funding a small business is through a Merchant Cash Advance. The main criterion for receiving a Merchant Cash Advance is to have a predictable credit card sales volume. Factoring in your sales volume is important and this is done every month to determine your monthly sales and it also defines the amount of risk associated with the merchant’s credit card processing. The risk factors that have been spoken of are most important to the bank, when there is a high incidence of charge backs in high volume merchant accounts. The risks are higher when the sales volumes are high and there is a larger amount of money being used through fines and sanctions which induces higher stakes. But is a business shows signs of a steady credit card sales volume, then the provider will purchase a fixed dollar amount of your future credit card receipts at a discount. Hundreds of dollars will be paid to your business and on your future credit card sales the provider will receive a fixed percentage of it. In other words, when you have been approved and funded with almost no paperwork involved, the provider in return for that lump sum advance, will receive a percentage of your daily credit card sales. This is not complicated at all.
The benefits of finding the right merchant cash advance provider are many. The first benefit you can gain from merchant cash advance is that you can get it very fast as soon as the application process is completed which is between three to fourteen days. With most providers, you can spend the proceeds from a Merchant Cash Advance on whatever is best for your business. Although the cost of this cash advance may be slightly higher, it give more opportunities for business owners that that of traditional providers.
The average repayment time frame for a merchant cash advance is eight to nine months. The terms of these cash advances can be as short as four months or as long as eighteen months. It is dependent on the type of business you are in. But it works this way, the higher the fixed percentage of your credit card sales you would want to pay the lender, the shorter will you repayment time will be.
It is therefore wise to consider what is best for your business when it comes to selecting your payment options since this will involve either paying out a higher over-all cost or suffering a tighter cash flow.
How to know whether a merchant cash advance will make sense to your business is to consider that you will be paying off a loan with daily credit card sales which can hurt your cash flow more than you might expect.
Originally posted 2016-10-14 11:36:43.