A merchant cash advance, which advances your business for its future credit card receipts, can help you obtain much needed funding when you might not qualify for traditional loans. Listed below are some of the potential benefits to your business:
1) It’s not considered a loan.
A merchant cash advance is different from other business loan or business line of credit because it is not really a loan. If you operate a business that also processes credit card transactions, then you are a merchant processor and can qualify for this type of business financing.
A loan has an interest rate, which means that the amount will be ‘amortized’ in such a way that you will pay back more than you initially borrowed. However, with a merchant cash advance, the factoring company simply gives you less than the total amount they will collect from your credit card sales.
2) Personal credit history can be less of a factor for approval.
One of the first things a traditional loan lenders look at is your credit score. A negative credit history lowers your credit score and makes it more expensive or impossible for you to borrow. A limited credit history has the same effect. If your business is new or you have never needed financing, getting a loan can be more difficult.
With merchant cash advances, the factoring company often fund your company on only a 60-day history of credit card sales. The ‘factor’ already knows the risks in arranging advances on major credit card sales and doesn’t need as much history to determine if they can make money by advancing you.
3) Less risk for your company.
With a traditional loan, you share risk with the lender. If you cannot repay, the lender can take whatever you have put up as security and can take legal action to force you to pay the balance. In either case, your credit rating is negatively impacted. With a merchant cash advance, the factoring company that advances you the money takes the risk. Funds are advanced to you and the ‘factor’ then collects a percentage of credit card sales due to your business.
This also means that payments can be more easily managed, creating an excellent cash flow solution. If your revenues are up this month, your payment due to the factoring company will be higher. If your revenues are down, your payment due will be lower!
To learn more about merchant cash advance funding, please visit http://www.blsfinance.com/mca.aspx . Or you can call 980-202-7990 any time Mon. – Fri. 9am – 5pm EST and we will be happy to consult with you.