To start a business, you need two essential things: vision and investment. While you might have the right, scalable idea, it is important to get the capital to begin. A small business’ success can be accelerated with the help of a merchant cash owner. How so? The answer to this is an excellent form of loan known as a merchant cash advance. With one, you, a small business owner can get the amount you need to start your business. Let’s see how it works.
A merchant cash advance is given to a new business owner to kick-off his business. This way, the merchant cash owner can have a percentage of your credit. The exchange takes place at a higher level, that is, the cash owner arranges with your card company to send off a percentage of your credit/debit to him and pay him for his help at the start.
This is beneficial for both the parties since the loans to start a small business needs good credits, which is not always positive. Thus, the you don’t need any guarantees to get the advance from the cash owner. The cash owner can benefit from this when he is repaid. The price repaid is more than the amount he gave since it is given back with the addition of the annual percentage rate. This might make things a tad difficult for you as a business owner since the price to pay is a lot more than you borrowed and the faster you want to pay, the higher the annual percentage rate applicable. The amount is multiplied with a factor rate which makes the amount more.
The help is definite and sure, but it comes at a small price, which on the brighter side is a small price to pay to greatly boost your business since the credits needed for a normal loan are extremely high.
A merchant cash advance is a tool business owners can use to get an advance on their future revenues. The business owner must accept credit cards or have other payment streams that regularly flow into a merchant account. Merchant cash advances are not loans, but simply advances that rely on future sales and revenues coming into the business. Business owners can typically apply for a merchant cash advance and receive an advance very quickly.
Essentially, business owners sell part of their future sales in order to get a quick advance on capital. Merchant cash advance providers operate differently in their risk evaluation process compared to traditional bankers. Generally, providers will determine risks through daily credit card sales of the business. If the business can pay back the advance in an appropriate time, it will qualify for an MCA.
Merchant cash advance rates are usually higher than alternative business loan options. Generally, MCA providers approve advances for businesses that may not be able to get business loans. However, if the business can show a healthy stream of credit card payments, merchant cash advance providers will be available. Business owners should stay informed about the terms of merchant cash advances, so they know if it’s right for them.
As a small business owner, you are almost guaranteed to face challenges of all sort on a regular basis. Depending on what industry you are working in, whether you are providing a service or a product, it is almost inevitable that you will experience some highs and lows along the way. It is understandable if at one time or another you need to borrow some extra cash to get things back on track.
A merchant cash advance could offer you a fast and easy option for freeing up working capital in a hurry. Unlike a small business loan from a traditional banking institution, this type of commercial lending is secured based on your past and potential credit card sales. Regardless of whether your transactions are consistent or fluctuate from month to month, you could still qualify for funding.
You may own a seasonal business that generates a majority of your sales and profit during certain times of the year, which is not a problem. Approval for a merchant cash advance is based on a long-term evaluation of your transactions, not on a monthly or quarterly report.