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Is the Merchant Cash Advance an Option for the Small Business?

A new alternative to the traditional small business loan, merchant cash advances continue to grow in popularity. Why? Instead of waiting weeks (or months) for cash – only to find they’ve been declined – the merchant cash advance allows the business owner to secure cash fast. An alternative lender like First American Merchant can advance you the funds you need in as little as 72 hours (if not sooner).

The lender provides you with this working capital by making a purchase of your future credit and debit card sales; the amount of sales and the discounted cost are agreed upon by both parties during the setup process. Unlike a traditional business loan, a merchant cash advance involves an easy, flexible collections process. Payback is a percentage of your business’ sales. When business is good, you’ll payback more. If business is slow, you’ll pay back less.

When can a merchant cash advance help?

Considering the flexible collections process, a merchant cash advance can be very useful for the seasonal business. But a merchant cash advance can be used by any merchant that accepts credit cards as a form of payment. If your business experiences irregular sales flow and fluctuating repayments, a merchant cash advance can ensure you maintain sufficient cash flow. In general, business and industries considered to be high risk often turn to merchant cash advances. Traditional lenders shy away from the risk and refuse to offer financing.

Key features of a merchant cash advance

High approval rate. Approval for a merchant cash advance is based on your business performance rather than your financials, time in business or personal credit. Thus, many business owners have and continue to turn to this financing form for a cash solution.

No collateral or credit requirements. Alternative lenders – especially high risk lenders like First American Merchant – specialize in working with business owners struggling with bad credit. Because a merchant cash advance is a sales transaction, they are not reported on credit reports. In addition, there is no collateral required.

Hassle-free application process. One of the biggest advantages of a merchant cash advance is the quick and simple application process. Traditional financing involves extensive documentation and complicated contracts. A merchant cash advance application, on the other hand, can be completed in a matter of minutes, and requires minimal documentation.