If your business relies heavily on credit and debit card sales for payments, merchant cash advances may be right for you. While these advances don’t compare with loans in terms of application requirements and collateral requirements, they can still prove very helpful for businesses with no operating history or poor credit profiles.
Merchant cash advances are a type of business finance based on credit and debit card transactions made at your physical location or online, with lenders determining how much to lend based on both past transactions as well as what they predict will happen in the future. They will then subtract a small percentage from each sale made daily as payment toward repaying their loan – this can be especially helpful for companies experiencing sales decline and need money until conditions improve.
Merchant cash advances tend to be safer than bank loans for the borrower. Most lenders will conduct a credit check as part of the application process, though this typically won’t have a negative effect on your business’s credit report or score; this factor can often make or break other types of business loans with larger sums available.
Merchant cash advances do not require collateral or submitting a business plan as collateral; repayment is based on a small percentage of future credit and debit card transactions – thus the amount deducted from daily sales may differ depending on how your business is doing – making them ideal during times when your company may be struggling, since deductions will need to be taken from sales fewer often.
An additional advantage of merchant cash advances is their quick approval and processing time; some lenders require as little as three days, making this fast loan option especially valuable to small businesses that need immediate funding to cover short-term financial emergencies or capitalize on lucrative opportunities.
When seeking out merchant cash advances, be sure to compare quotes from multiple lenders. While online lenders may seem convenient, local lending sources may better meet your business’s needs – offering personalized assistance tailored specifically for your circumstances or even providing access to financial products not available online.