Choosing a merchant cash advance can be a great option if your small business needs financing, but may not qualify for a traditional small business loan. With a merchant cash advance, you can use your sales history as a pledge to your creditworthiness and secure funding for your business within weeks. So what is a merchant cash advance and how does it work? In this post, we’ll explain the ins and outs of this unique financing option and how it can benefit your small business.
A Merchant Cash Advance (MCA) is a type of funding product used by businesses to borrow money against their future card sales. In contrast to traditional loan products, an MCA typically involves giving the lending company a percentage of the business’s daily credit card or debit card sales, until the total amount that was advanced is paid back in full. This type of funding can be beneficial for businesses that need capital quickly and have difficulty with obtaining loans from banks or other financial institutions. Additionally, in many cases, an MCA provides more attractive payment terms over what traditional lenders offer, including fewer cash outflows when compared to other forms of business cash advances.
A merchant cash advance, also known as a business cash advance, is a type of merchant financing that can help businesses access large amounts of capital in a short amount of time by using card sales as collateral for the financing. It’s much faster than the traditional loan process, but carries some different risk factors that you should be aware of before committing to your financing. Merchant cash advances provide quick relief for companies who find themselves in need of extra funds for their operations and lack the time or creditworthiness necessary to qualify for traditional lending methods. The shorter-term nature of this kind of financing makes it a good choice for when you require more immediate access to capital.
One of the key benefits of a merchant cash advance is that they’re available to businesses who may not have the creditworthiness required for approval of a traditional small business loan. Because you can leverage card sales as a backing to your overall business health, lenders are more likely to approve funding to businesses with a high volume of card sales, regardless of your credit history and other business metrics.
Obtaining business cash advance or merchant financing as a source of business funding can be a great way for small business owners to get the capital they need to thrive. However, it is critical to be aware that it does come at a cost, and it can be expensive. It is essential to compare different lenders before committing and make sure you understand the terms and conditions thoroughly. By using a broker like Llama Loan, you can get instantly matched to premiere lenders that offer the lowest rates with the best terms.
As with any kind of business financing, when considering a merchant cash advance, it’s important to make sure you have evaluated your financial situation thoroughly. Plan ahead in order to clearly state where the money will be going and how you will repay the loan. It’s also crucial to assess your current revenue streams and outflows – can you still cover your other bills with lower income from card sales? Being prepared is key if you want to ensure the longevity and success of your business for the long run.
A merchant cash advance can be helpful for businesses that need money quickly, but it’s important to compare different lenders and types of financing before committing to this form of funding. Because a merchant cash advance is typically repaid through a percentage of the business’s daily credit card sales, it’s important to have a plan in place for how you will use the funds and how you will repay the loan. If you’re considering a merchant cash advance, take some time to review your options and make sure it’s the right decision for your business. Get in touch with Llama Loan today and we’ll help you every step of the way at no cost to you!