Home : Loans : Things To Know About Merchant Cash Advances

Things to know about merchant cash advances

Cash flow controls the everyday functions and overall sustenance of a business as cash is the regular mode of payment for operational and production costs. A business’ credit score can be dependent on a lot of external factors such as market conditions, recession, or even just being in the “high-risk” category. In such circumstances, the one lifeline that can save all temporary glitches and prevent the standstill of a business function would be to get a merchant cash advance.

Things to know about merchant cash advances

A merchant cash advance is a simple fund offered by lenders who do not qualify under the credit score range or fail to qualify the requirements for securing a traditional business loan. However, a merchant cash advance is not a loan but rather a cash amount based on a business’ or merchant’s future sales predictions.

Merchant cash advance is the best form of alternative funding as compared to a traditional loan because of the following:

  • The approval rate for securing a merchant cash advance is higher than a loan. In a loan, a business has rigid requirements such as business operational time, specific documentation, credit score, etc. On the contrary, a cash advance is not based on any of these factors as only the future sales of a business is purchased and paid for.
  • No collateral is required for a cash advance loan like that in a traditional loan; a cash advance is also not dependent on credit reports. A merchant cash advance is basically a sales transaction.
  • Securing a merchant cash advance does not have a complicated application process and the amount can be acquired within the same week of application.
  • The repayable amount is not fixed and is flexible based on the business’ sales growth every month. Merchant cash advances are paid back on a percentage-based collection policy, thereby allowing a business to bear the debt without having major dents in their financial status.
  • There is no rejection of applications even for those businesses with bad credit scores. The approval of a merchant cash advance loan is based on a business’ sales figures, and therefore, a credit report has no impact on your lending status in this form.
Disclaimer:
The content provided on our blog site traverses numerous categories, offering readers valuable and practical information. Readers can use the editorial team’s research and data to gain more insights into their topics of interest. However, they are requested not to treat the articles as conclusive. The website team cannot be held responsible for differences in data or inaccuracies found across other platforms. Please also note that the site might also miss out on various schemes and offers available that the readers may find more beneficial than the ones we cover.