Before ISOs and lenders give any funds to merchants, they should consider whether or not the business in question should obtain a small business loan or a merchant cash advance (MCA). Answering this question correctly and proper management afterwards, could be the key to sustaining merchant accounts or losing them to another ISO or to bankruptcy.
Credit and cash flow are two variables that ISO managers can use to help them decide which type of loan will be most successful for their merchants. In general, merchants with less than average credit are candidates for MCAs (small, quick short term loans with higher than average interest rates), while merchants with above average credit are best suited for business loans. Business loans can provide 30% more funding than a merchant cash advance and more flexibility.
In terms of cash flow, merchants whose cash flow varies from day to day, like a retailer, would most likely benefit from a MCA. A merchant cash advance takes a percentage of a business’ daily revenue, therefore the payments that an ISO will receive from the merchant will differ from day to day. If a merchant earns approximately the same dollar amount every day, then they usually qualify for a business loan which can be repaid in fixed installments.
The advantages to managing merchant accounts in this way are twofold. First of all, an analysis of cash flow and credit forces ISOs to be more involved in their merchant’s affairs. This creates the opportunity for more informed merchant management, which leads to greater account success. Also ISOs have used this approach as a strategy to find and acquire new merchant accounts who are unsatisfied with their current ISO.
Merchant Cash Advance Bad Credit
1st American provides funding from your merchant account along with flexible payback and fast approvals. 1st American is the number one provider for merchant cash advance for bad credit merchant accounts.
Call 1-888-785-6811 or click below to learn how to obtain a merchant cash advance today
