Many high risk merchant account providers tout merchant cash advances as the only option for their high risk merchants. While it is a popular way to obtain business funds fast, many may wonder if it is truly the best option. Below you will learn of the pros and cons of merchant cash advances, so you can decide for yourself.

Pro: Quick Funding. Funds are made available in as little as three business days, which helps struggling merchants get ahead.

Pro:  Little Paperwork. Little paperwork is needed, because your merchant account provider already has your financial documents.

Pro:  Low FICO’s are welcomed. FICO scores under 500 are welcomed, unlike with a traditional bank loan. This helps merchants with not-so-great personal credit get ahead in their business life.

Pro: No Crazy Payment Plans! With a bank loan, you end up paying a high interest rate on top of a big lump-sum payment once per month. This large payment can quickly crumble a struggling business. With a merchant cash advance, payments are taken daily or weekly in small increments are decided on by you and your merchant account processor. It is one less thing for you to worry about.

Con:  You Must Have A Merchant Account. The fact that you must have a merchant account is not a big deal for many merchants, but for those who do not, they cannot get a merchant cash advance. They are eligible for another service – ACH Funding from FAM, but the terms differ from a merchant cash advance.

Con:  The Industry Is Not Regulated. This is a con, but for those who are anti-big business/big bank, this is a good thing. The “con” is that you need to make sure that whomever you are obtaining your cash advance from is educated in the industry, and has a good reputation. Research your options before signing on the dotted line.

There are many pros and cons to merchant cash advances. While this list of pros outweighs the cons, you need to figure out what is best for your business, and consult FAM or your merchant account provider when you are in need of funding.

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