9 Reasons Why You Should Get A Merchant Cash Advance

By rotide
Created 14/03/2018 - 15:18
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Surely you've heard of business cash advances before and perhaps you know exactly what they are - a nice alternative to other loans and financing options for small businesses. But are you uncertain of whether or not you should opt for a financing option like this?

Here are 9 reasons why you should get a merchant cash advance. Hopefully this will help you decide whether or not this is the right option for you and your financial struggles, or maybe have a look at this more comprehensive guide [1]

1.     Because you need money

Let's get the most obvious reason out of the way - you should get an advance because your business is in need of money. Especially for small businesses, it is absolutely crucial that they maintain healthy cash flow, which requires sizeable capital. You cannot falter during the first couple of years, because this is the time when you set the foundation of your business. A business cash advance can provide you with the money you need to support your small business.

2.     Because you operate with credit cards

One of the most basic, non-negotiable requirements of a merchant cash advance is that you operate with credit cards and debit cards. You see, because of the way the repayment is made on this advance, your business needs to have operated with credit cards and debit cards for at least 12 months before you can apply for an advance like this. If you get approved, any repayments will be taken exclusively from income you make from these transactions.

3.     Because you make the minimum required amount in credit card transactions

And speaking of this type of transactions, there is also a minimum amount that you need to make per month in order to qualify. Repayments consist in a small, fixed percentage of your daily credit card income, so it goes without saying that the lender must confirm that you make enough money for repayments to be possible. If you already do make this sum, that is one more reason for you to at least consider opting for this financing solution, as no effort is required.

4.     Because you don't need collateral

One major advantage with merchant cash advances is the fact that you do not require to secure the money with an asset put up as collateral. You see, this is possible because of the way repayment is made. Since the lender automatically takes the percentage they are owed every day, that means they have access to your accounts and thus, you cannot default on the loan or skip repayments, make late repayments, etc.  

5.     Because you don't need good credit

Continuing with the point made above, a particularly good credit rating is also not required. Your financial history is not necessary, except for the credit card transaction history from the last 12 months. That will allow the lender to make an idea of how much you stand to make from credit card and debit card transactions and what your projected income might be.

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6.     Because the repayments are flexible

Perhaps the biggest advantage of merchant cash advances is the method of repayment. Instead of making fixed repayments, the repayments are flexible. You don't pay the same amount every month, but a small percentage every day. That means that the amount you pay is proportional with the amount you make on any given day.

7.     Because affordability is ensured

Affordability is not a concern with business cash advances, because it is pretty much ensured by several factors. First of all, the lender checks your previous income from credit card and debit card transactions and makes an estimate on how much you stand to make, which means there is a very small possibility of you not being able to afford repayments. In addition, the way the money is repaid - in percentages proportional with your income - makes it possible for your repayments to always be affordable.

8.     Because you can't get other business loans

Unfortunately, loan options like business loans or start-up loans [2] can come with a lot of criteria and requirements, mainly related to how long your business is supposed to have operated. That can knock a lot of companies out of the running. And when your business needs money, but you can't get business loans, what are you supposed to do? A merchant cash advance can fill that gap quite nicely, providing you with a decent alternative you can count on.

9.     Because you don't want to get personal loans

When they can't get business loans, some business owners settle for getting personal loans, instead. However, they come with their own set of disadvantages, such as the fact that they are unsecured and that you would need to take full responsibility for them. So, in the eventuality of a default, it is your personal credit rating that would suffer the consequences. That may be a deal-breaker, which is why it's good to have another option, such as a merchant cash advance.

As you can see, there are plenty of reasons why business cash advances [3] make for an excellent option for financing a small business. If your business fits into these requirements, or if the terms of this kind of arrangement seem appealing to you, then perhaps they will be advantageous to your business. Consider getting a merchant cash advance to help support your small business financially. 

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