One of the key things you need to know before starting your merchant cash advance is that while it may seem like a great idea at first, you will have to pay the majority of the merchant cash advance back within a six month time frame and your interest rate you are paying has the potential to be over 50 percent.
If you are a small business owner that can be a bit overwhelming to take in. How do the lenders get away with it? Well they avoid calling these transactions loans and instead state they are purchasing a piece of that company’s future revenue.
Here are some things you can do to help make the best decision for your merchant cash advance. First, ask to see every fee upfront before making a final decision. Don’t just look at these fees, ensure that you understand each one of them so you have the best understanding of what you are paying.
Next, read the terms and make sure that you understand these terms. Some merchant cash advance loans require that a daily fixed amount will be taken from your account while others may choose to take a certain percentage off of daily credit card sales. Some lenders may even demand to be paid 10 percent of daily credit card receipts until the merchant cash advance has been paid back. This 10 percent or whatever percent they tell you is not the rate you are paying them. You need to know your rate before agreeing to it.
Ask whichever company you are considering for a projected annual percentage rate or A.P.R for your loan before agreeing to it. Doing so will make it easier for you to compare the rate to other merchant cash advance companies you have been looking at and this will help you to receive the best possible loan.
Lastly, do some shopping around before settling on the merchant cash advance. This will help you to ensure you get the best possible rate you can get.
