Many small business owners require additional cash flow in order to meet the rigors of running their company, such as day-to-day expenses, recurring bills or expansion and improvement projects. A merchant cash advance Birmingham AL may be an attractive solution for those needing access to funds quickly without going through lengthy application procedures or credit requirements.
Traditional loans often require collateral and extensive background checks before lending, while merchant cash advance accounts (MCAs) tend to be much more lenient regarding a business’s financial history. Lenders will still examine it, but are usually more interested in seeing the volume of credit card payments processed through its merchant account – making MCAs an ideal solution for companies without stellar credit histories or new to the industry.
Merchant cash advances offer more flexibility than other forms of financing, since their repayment amount depends on a percentage of future credit card sales that your business expects to generate. When the business experiences an off month, repayment will be lower than in better performing months – this offers significant advantage over loans which require fixed monthly payments that could hinder expansion during tough times.
Merchant cash advances offer significant advantages in terms of quick and easy approval processes. Many lenders provide estimates within hours, then fund advances same day. This process is significantly quicker than applying for and receiving traditional loans, which may take weeks.
While merchant cash advances offer many advantages, they also come with drawbacks. Chief among them is that financing costs tend to be higher than traditional loans due to lenders charging fees based on pennies per dollar spent and expressed as factor rates; these fees vary from company to company but tend to be higher for larger or more established enterprises.
Another drawback of some companies’ billing practices is their tendency to alter them without informing their customers, leading to confusion and potentially costing businesses who rely on regular payments as their source of cash flow. Businesses often find it challenging to exit an agreement if they cannot make their monthly payments; however, when these issues are addressed promptly a merchant cash advance can become an invaluable tool in expanding a small business. One key thing to keep in mind when using business growth financing is that this type of funding should not just cover daily expenses. Instead, this funding should help a business increase revenue and improve its chances of succeeding – for more information regarding this form of funding it would be wise to speak to an experienced lender.