For business individuals planning to expand their businesses, merchant cash advance is actually an easy and fast way to obtain business financing. However, individuals have to note that Merchant Cash Advance, shortly known as MCA isn’t really a loan. This is rather an advance against the future debit and credit card sales. Individuals need to pay it back daily through sending set percentage of that particular day’s card sales directly to lenders. Annual percentage rates can somehow range from 70%-350% higher than small business loans from online lenders or banks.
Business individuals are therefore advised to be very careful for one merchant cash advance may lead to other cash advance creating series of debts that are hard to stop. But on the other hand, it still can’t be denied that this is proven to be a helpful financial option for business owners who are planning to expand.
Merchant Cash Advance and When to Consider this Option?
If you have a business that needs instant capital, you may want to consider applying for merchant cash advance. However, there are instances that your cash flow is not where it should be. Your biggest potential clients are probably late on their invoices or you just have had to make huge and unexpected purchases that are affecting your business finances.
In the long run, you can resort to merchant cash advance if you need funds for business expansion or if the need for business working capital seems dire. There are actually many ways to get the funds or capital you need for your business and Merchant Cash Advance is one of them.
Advantages of Merchant Cash Advance
One of the major benefits of Merchant Cash Advance is the easy and convenient approval process. Unlike other loan applications that require countless paperwork as well as preparation, merchant cash advances do not really require you to secure extensive application.
Since terms for loan repayment are secured by established rate of one’s future credit card sales, providers of merchant cash advance are not fully concerned with your credit status or your credit score. Moreover, merchant cash advances do not require clients to have various years of guaranteed or proven profitability just to qualify. Since these are easy standards to qualify, most business owners don’t encounter problems obtaining merchant cash advance.
Another big advantage of this is that it requires no collateral. Business owners can apply for advance and instantly see funds hit their account without collateral required. Merchant Cash Advance actually makes the most sense for businesses that plans for expansion or businesses that need capital and left with no other option.
Nevertheless, before applying for merchant cash advance, you need to weigh all your options. Think about how fast you need access to business capital or business funding, the amount you need to borrow, amount you can afford to pay back in fees or interest and more. But if you are confident that merchant cash advance is the right option for you, then go for it.