Important Information About Merchant Loans
What are the many roles played by merchant loans and business loans in the business world? Most business owners require business capital to be able to expand their businesses, marketing & advertising, or for catering to business emergencies such as breakdown of machinery used in production. Sometimes, the only way to fix the business related problem at hand is by acquiring a business loan from financial institutions or other alternative business lending institutions.
What is a Merchant loan?
A merchant loan may be a lump sum amount given to a business in exchange
for an agreed percentage of future sales/income of the business. The merchant loan or
merchant cash advance are generally paid back in small amounts, with the merchant loan repayment period typically not exceeding eighteen months.
However, just like other types of business loans, merchant loans have terms and conditions that must be met before the funds are approved and sent to the merchant loan applicants business bank account. As most merchant loans are advanced without security via collateral in some shape or form, the merchant loan company will be relying heavily on the credit history of the applicant and the business, the past and recent financial statements of the business, and the overall credit worthiness of the borrower. Payments of merchant loans and merchant cash advance loans are generally made on a daily basis and in
fixed amounts that sometimes increase gradually with time over the entire life of this type of business loan.
This alternative business capital loan, are usually leveraged by small retail business owners who do not qualify for regular bank business loans by traditional financial institutions. This is because business bank loans almost always require collateral, of which, the small business owner may not have. The downside of merchant loans and merchant cash advances, they are usually more expensive in terms of interest rates compared to small business loans given by banks.
Financial advice from a professional is recommended to businesses owners seeking this particular business funding option as they need to fully understand the complete terms of the merchant loan application and repayment options there of. Due diligence is always the best way to prepare for any type of business loan application, as some of these business loans may be termed such that a fixed amount is taken from your account and you may think that this is the rate you are paying for the loan but in the real sense it is not.
You should also demand the company giving out the loan to give you a fair interest percentage rate as it will be easier to compare merchant loans with the rates of different alternative business lending companies. Remember, merchant loans and merchant cash advances are high risk business loans that incur higher interest fees than a normal business loan as they are unsecured. Due to the simple fact that they merchant loans and merchant cash advances allow business owners flexible options for business capital, they have become quite popular, are extensively being used by small business owners nationwide, and have greatly contributed to the growth and recovery of many small businesses.
What are merchant loans- options
Read more about our many different merchant advance loans and merchant cash advance loan programs