Getting turned down for a business loan can prove to be a fatal blow for many businesses. This is particularly true if they depend on that loan to keep things running until their business picks up. Smaller businesses need room to expand. The most successful businesses seek outside financial help to facilitate their growth endeavors. Many companies will opt for a business loan. Business loans are a great aid, but can cause a heavy strain on the business. The company will have to consider the strain of day-to-day cash requirements.
Merchant cash advances (MCA) provide immediate cash into the hands of thriving businesses in need. Business cash advances are used as a financial tool for businesses looking to expand, purchase equipment, move locations, etc.
Advances ranging up to hundreds of thousands of dollars can be obtained based on your sales volumes and future credit card sales. There are many positive outcomes in receiving merchant cash advances, but be aware of possible difficulties.
Merchant cash advances do not need collateral
MCA providers finance small businesses without asking for collateral. They verify the credit card sales of the business and its credit rating before approving the business owner's application for a cash advance.
MCA providers take a cut out of the credit card sales of the business for a specified time period, till the advance and the premium is recovered. This affects the profit margin of the business, but the business owners do not have to stake their personal possessions for the funds.
Once the contract is signed, the business owner cannot opt not to pay the MCA provider. The credit card payments are handled by the processor, and the MCA provider is guaranteed payments till the time the business stops making credit card sales.
Verifiable credit history and assured payment through credit card sales are the factors which make MCA providers confident of payments without needing the assurance of collateral.
Which is a better option - loan or MCA?
If the business is doing well, taking a home loan or commercial loan to expand the business makes sense. However, if the business is not doing well and needs funds urgently, an MCA is a better option as it takes less time to process and does not need the surety of collateral.
Merchant cash advances are a useful option when business owners need funds immediately and cannot stake personal assets.
Having bad credit isn't going to keep you from getting a merchant cash advance. They just need to make sure that you do a reasonable amount of business and you are going to be able to pay them back. The majority of those who apply for a cash advance do so because the banks have turned them down. And the majority of those who apply get approved