Advantages of Merchant Cash Advance Funding For Businesses

Many business owners might think that a merchant cash advance is not for them when they need funds. Here we consider merchant cash advance funds advantages over getting money through a bank.

Requirements. Increasingly, banks are more and more strict in terms of lending guidelines. If your credit is not over 700 then it is not easy to get an unsecured business loan. Merchant cash advances are not likely to be declined on account of credit score.

Secure vs Unsecure Loan. A bank loan typically appears on one’s personal and business credit reports. Some loans would even require collateral such as being secured by one’s home. Such loans also appear as liens on ones business. Merchant cash advance money does not appear on one’s credit nor as a lien on one’s business. Also, since the loan is not apparent to other creditors ones debt-to-income ratio is unaffected unlike with a bank loan.

Flexible vs Inflexible Payback. Bank loans are paid back with the same payment each month. If you miss a payment because of a poor month then your credit suffers and you are likely to face fees and penalties. With a merchant cash advance the money typically comes back as a percentage of ones income and so would go down as your income falls. Therefore there is no chance of penalties nor credit damage.

Funding time. Bank loans typically take weeks and weeks to fund. Merchant cash advances take typically 7-10 business days!

Cost . Bank loans typically have significant origination and other fees tacked onto the loan amount. Moreover, business loans are likely to be high interest, often over 20% APR. If you take the full term to pay off the loan you are likely to pay the debt off 2 to 4 times over. The bank loan may have a prepayment penalty to prevent you relief from paying huge amounts of interest. There is also the risk of additional penalties. With merchant cash advances you will pay the debt off faster and with much less fees than paying back a traditional loan.

Overall merchant cash advance is often a good option as compared to a traditional loan.