For any business to run effectively, cash flow is vital. Without adequate cash flow, a lot of operations will be interfered with, which is not good for business. Many businesses will apply for a loan to provide money for everyday undertakings. However, for companies that cannot meet the demands of loan institutions, a merchant cash advance may be the only viable solution. A merchant cash advance is money given to a business against its financial credit or debit card payments. A merchant company will lend a business a lump sum of money to tend to its financial needs. In return, the business enterprise will give an agreed portion of its credit or debit card payments to the merchant cash advance company. This transaction continues until the whole amount has been cleared. The payments go directly to the merchant company from debit and credit card processing companies.
A lot of businesses that do not qualify for bank loans benefit greatly through this operation. Granted, the interest rates are higher compared to bank rates but a business is guaranteed continuity through the cash advance. Other benefits include;
No security required – A merchant cash advance does not require anything to be held as security comparable to what banking institutions do. A business, therefore, does not have to undergo the unfortunate situation of losing its shares trying to repay a loan. In addition, there is no issue of the credit score involved. As such, the credit rating remains unaffected and the business can comfortably meet its financial obligations.
Reasonable requirements – to qualify for merchant cash advance, a business needs to be in operation for at least nine months. Additionally, the lowest monthly proceeds on the credit cards should be $5,000 - $10,000. This depends on the merchant company you select. The procedure does not call for much as long as the business can present its tax returns, bank statements and its prospects.
Credit history is irrelevant – A business can get up to five million dollars regardless of its credit history. The money is tax-free and, it can be issued within hours. The documentation process is simple and does not require much, as mentioned earlier. This affords a business the chance to carry out its transactions as soon as possible.
The process is unbiased – for a business to qualify; overall accomplishments are the determining factor. This means that based on a business’s productivity, chances of getting the merchant cash advance are very high.
If your business accepts credit cards, you are one step closer to qualifying for a merchant cash advance. Once you agree to the terms required of you, the merchant company will simply purchase future credit and/or debit card receipts. You immediately receive your cash but ensure you understand the terms of repayment clearly. These will include a set percentage of card receipts until payment is complete.