When a Merchant Cash Advance May Be Your Best Option


Did you know more than 500,000 new businesses start each month? Despite this number, prospective business owners increasingly have trouble receiving capital from traditional bank lenders. The same can be said for business owners who need more capital for an already established business. In some cases, a merchant cash advance may be the better option.


Your personal credit score is a serious factor in whether a traditional bank approves you for a business loan. If your credit score is not as good as it could be, a merchant cash advance could be what you need. Although these lenders still look at your credit score, it is not as heavily weighted in the decision process. They understand that a wide range of situations can cause a credit score to plummet and consider the reason for your low score in the decision process.


Even if you have good credit, some traditional lenders expect you to put up collateral if you take out a loan. If you don’t own anything you can put up or if you don’t want to list your family home as collateral, consider a merchant cash advance. Approval for these advances are approved based on monthly credit card sales or other factors and do not rely on collateral as a means of securing repayment.


Most banks won’t approve a business loan that is smaller than $200,000 but if you only intend to make minor improvements to the business, you won’t need that much capital and will end up paying quite a bit in interest that you needn’t have paid. Cash advances have a much lower threshold. They also allow you to pay back your loan much faster. Traditional loans typically require you to pay them back over a decade or two and the lender may charge you a fee if you pay it off early. A cash advance allows you to pay your loan back in a much shorter amount of time and will not charge a fee if you pay it off sooner.


Finally, a cash advance is the best choice if you need cash right away. Applying for a traditional loan requires a large amount of paperwork followed by a lengthy waiting period while the lender makes a decision. Cash advance lenders work quickly and can often make a decision about your application in a matter of days.


If you decide that a merchant cash advance is the right option for your business, research the lender first. This ensures you work with a reputable company that will not put your business in even more financial danger.


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