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Merchant Cash Advance: A Bad Credit Borrower’s Best Option

Of the 28 million small businesses operating across the United States, 39 percent are owned by women, according to the Score’s The Megaphone of Main Street: Women’s Entrepreneurship, Spring 2018 report. Though the number of women-owned businesses continues to rise, only 25% of women seek financing for their businesses.

The truth is that most new entrepreneurs have trouble getting banks to lend them money. But, women find it even more difficult to seek and obtain financing. If a woman has bad credit, as well, she can expect her lending options to become even more scarce.

To keep business’ running and thriving, women need to understand all of their funding options. Finding a unique financing opportunity often is much faster than waiting for a bad credit score to improve. One of the best ways for women with bad credit to get a quick burst of cash for their businesses is to apply for a merchant cash advance.

Merchant Cash Advances Explained

A merchant cash advance is a type of asset-based funding that are not the same as a traditional loan. When a business gets approved for an advance, the lender gives the merchant an upfront cash payout in exchange for a sum of its future credit card sales. The merchant repays the advance by remitting fixed daily or weekly debits from its bank account until it is paid back in full.

Ideal Candidates for Merchant Cash Advances

Many businesses, especially smaller ones and those with credit problems, embrace this type of financing because it allows them to get money in about a week, it doesn’t require any collateral, and they get the funds they need despite their bad credit scores. Merchants with bad credit can still qualify for an advance because eligibility standards are not as stringent with this type of financing.

Since funding is based on future credit card sales, to get approved, merchants must have large, regular volumes of credit card sales. In most cases, the ideal borrower is a merchant that works in retail sales or a similar venture.

Credit Scores Impact Factor Rates

Though merchant cash advances are the ideal financing option for merchants with no collateral and no to bad credit, it does not mean that you should not work to clean up your credit history and improve your score. The better the credit score, the better the factor rate you will receive on a merchant cash advance. The factor rate determines how much you will pay in fees to borrow the funds.

In Conclusion

A merchant cash advance loan has its advantages. This type of financing puts cash in a merchant’s hands quickly, it doesn’t require collateral, and it often doesn’t matter if you have a poor credit score.

Though there are many of positives, it is important to remember that a merchant cash advance can be an expensive form of financing. Before you move forward, make sure that you understand all of the fees and charges, and plan accordingly. Just like with any type of loan or credit card, the sooner you can pay back the advance, the better.

When you need a quick lump of cash to buy extra inventory before the holiday season or to buy a new piece of equipment that will allow you to operate more efficiently, consider a merchant cash advance. Turn to First American Merchant (FAM) when you want to move your businesses forward. FAM offers many types of financing, including small business loans, to small and large business so owners can realize their goals and dreams.

Whether you have bad credit or no credit at all, FAM has a solution for you. Apply online to get the process started.