debt consolidation loans

How does merchant cash advance work?

It is important to correct the misconception that merchant cash advance is actually a form of a loan. In actual sense, it is not your ordinary loan but a way in which fixed dollar amounts are purchased from ones credit and debit card receivables with the intention of redeeming them at a later date. This purchase is based on a sales discount which is given to the purchaser.

Agreed percentage

Usually, the merchant and the lender have to agree on the terms of the merchant cash advance. Once the deal has been inked on paper, it basically means that the payment of the cash advanced will be offset on future receivables on the business.

Does this model offer any advantage over the conventional loans?

One of the more commonly asked questions is whether there is any added advantage with having the cash advance. The first advantage has much to do with the fact that there is a drop in the payments depending on the sales. If you are the merchant, then it solely means that payment to the lender is purely pegged on sales volume; if the sales are low, then payments will be low. This gives you as the merchantman advantage since you will pay less than the monetary value of the goods that you bought with the cash.

Ease of managing cash flow

You will not suffer any shortfalls in terms of cash. This is tied to the first point above but it also relates directly with management of one’s cash at hand. If this was not to be the case, then it would mean that you end paying from own pocket instead of the cash realized from the sales. Indeed, if you are a business person, you are better off with the merchant cash advance as opposed to the conventional loans which ignore all financial protocol.

 Quicker processing

You will notice that there is a faster access of the merchant cash advance than the conventional loans. This means in 7 days or less, the cash will be availed to you to keep you afloat with your business operations. The conventional loans on the other hand take abnormally long periods of time mad this could potentially affect your ability to do business.

The quick access to working capital is crucial in the business environment for the obvious reasons.

Business performance vs.  Credit scores

There is one fact about the merchant cash advance and that is the weight that is put on the business performance instead of judging the owner of the business in regard to the credit scoters. This means that you could be advanced cash that you need even with low credit core. No credit checks are carried out on you as what is important to the lender is that you are able to do business and help them realize their investment in your business. This is important to money lenders as well as the business people. Go ahead and apply today for the loan.

Most Popular

To Top