High risk merchants, and merchants with other issues have trouble getting a bank loan. While this may seem like a downer for your business, it is actually a blessing in disguise. Bank loans have a high rate of default, even for businesses that are not considered “high risk”. While you are still in need of extra funding, you need to forgo a crown funding account, donating plasma (though it is a nice thing to do), and asking Grandma. The one thing that you need to do is to contact your merchant account provider and ask for a merchant cash advance.
A merchant cash advance is attainable even if your bank loan application has been denied. This is because a merchant cash advance is not a loan, but a buy-in to your future sales. With a merchant cash advance, repayments are not a monthly hassle. The repayment schedule is simple: a small percentage that is taken from your credit card sales. If you do not make sales, you do not repay for that period. This is unlike a bank loan, where you have to repay whether you are under water or not. Collateral is also not an issue, since a merchant cash advance is not a loan and it is not required. Also, merchants with a FICO score under 500 are also eligible for a merchant cash advance.
Many high risk merchant account providers, such as FAM, offer up funding options for merchants without a merchant account. An ACH loan is operated basically the same as a merchant cash advance, except that funds are taken from the business checking account. There are also a few more criteria that must be met; for example, chargebacks must be kept below 3 per month, and a minimum of $10,000 USD must be taken in per month.
A denied loan application can leave you feeling lost. Where can you go to get the funds you need? While some turn to friends, family, and social media, the best thing that you can do is turn to y our merchant account provider. A merchant cash advance is where you need to look to increase your business funding, without the hassles of a bank loan.