Are you curious as to why small businesses are increasingly turning to a merchant cash advance for help? How does the merchant cash advance compare to traditional financing? Are the costs involved worth it? If you’d like some answers to your questions, consider the following example of how this alternative financing option can save the small business.
Why choose merchant funding?
Many business owners believe they’ve secured the appropriate amount of financing for their new business to succeed, only to discover their rapidly running low on working capital. First, they turn to the bank for a solution. On top of the endless documentation requirements and complicated contracts, the time it will take for them to obtain the needed cash is weeks (even months). For the small business in a dangerous cash flow situation, this is obviously too long of a wait.
This is where merchant funding comes in. While it’s true that the merchant cash advance may be a bit more expensive, the small business owner chooses this alternative option over the traditional business loan. Why? The business needs the cash to operate now.
How does the process work?
The alternative lender – like First American Merchant – advances the business owner the cash they need. This transaction is not a loan, but a sale. The lender is purchasing the business’ future credit and debit card sales; the amount and rate are agreed upon by both parties during the setup process. Rather than a fixed monthly payment, repayment is a percent of the business’ daily sales. This not only provides the business with the cash, but also much needed flexibility.
The speed in which cash can be secured is the reason many businesses choose this option. Upon completing the application, the business receives its funds in as little as 72 hours. This working capital ensures the business can grow, expand and seize opportunities. All in all, do your research. If your business finds itself in a dangerous cash situation, crunch the numbers to determine if a merchant cash advance is right for you. Taking advantage of this option just might rescue your business from having to close its doors.