Merchant Cash Advance Loans
In today’s world, where inflation is the order of the day and unemployment remains an untold mystery, you may need to come up with sources of business funding to enable you to start or boost your business. In most cases, banks may not provide the most convenient source of business capital. This can be worsened by hassles that you are required to undergo before obtaining a business bank loan, if you are caught in such a situation where you are in need of funding for your business but capital is limited, you may need to look for an alternative business loan program such as a merchant loan, merchant cash advance, or business line of credit.
What is a Merchant Advance Loan?
A merchant loan or merchant cash advance is offered to businesses owners as a type of unsecured business loan, with payments being made daily, weekly, or monthly according to the amount and volume of credit card sales a business takes in. No regular fixed payments, typical repayment is proportionate to the amount of daily credit card receivables, with a small percentage of each sale diverted to repaying the merchant loan.
Merchant advance loan repayment schedules are usually made between 3-18 months, but you are free to choose the duration within which you will settle the merchant cash advance debt. Basically, the interest on the merchant loan advance may increase with time, this of course varies according to which merchant loan company you may decide to use for your source of business cash flow.
Advantages of merchant advance loan
No collateral needed. You don’t need to have any collateral to qualify for a merchant loan. The plan to repay the merchant loan is once again based off of future credit card receivables of a business.
Convenience. This is the most convenient type of alternative business loan you can get especially when you have an emergency. Most applicants receive the actual merchant funding advance within 1-7 days of being approved.
No regulation. Merchant loans work without any restriction from governments, banks, or usury laws. As a merchant cash advance loan is not actually a business loan, merchant loan companies may offer their services without any regulation.
Disadvantages of this type of alternative business loan is that they charge higher interest rates, directly attributed to the level of higher risk involved in the repayment of said merchant advance loan. Compared to business bank loans, the interest rate is high and sometimes it may be exorbitant depending on the merchant cash advance companies offering merchant funding services.
Nevertheless, a merchant loan doesn’t qualify for long term source of capital, it can be used in emergency cases, for new or seasonal inventory, marketing & advertising, business expansion/upgrades, so on and so forth.
When applying for a merchant loan or merchant cash advance, understanding the in’s and out’s of your prospective business funding along with conducting your due diligence on the merchant loan company you plan on using will only ensure you get the best possible rates while limiting your risks with this type of alternative business financing.
Learn more about BFAdvance’s many different alternative business loan programs here-