A Short term business loan is an alternative to the traditional business loan. This type of financing is also known as a merchant cash advance. These types of advances are normally given to businesses that do not qualify for the conventional bank loan due to either bad credit or any other bank loan requirement. This arrangement is usually leveraged against a borrower’s future credit card sales. A business benefits from an upfront cash advance whereas the lender acquires rights over an agreed upon portion of the borrower’s credit card business sales.
Short term business cash advances are gaining popularity among businesses due to their no collateral and no credit requirements. While assessing cash through this option, a business does not run the risk of losing any of its assets should it default on the loan repayment, such assets would otherwise need to be placed with the lender as collateral. A business cash advance is usually viewed as a sales transaction therefore has no bearing on a company’s credit report and as a result does not affect the business’ credit rating, unlike other traditional form of financing like bank loans that are known to affect the lender’s credit rating.
The ease with which a merchant can access a Short term business loan has lead to the large uptake of this product by those in the business arena. Regardless of bad credit, lenders of Short term business cash advance typically ask for only a business’s monthly returns of credit cards and seek to establish how long a business has been in operation. Current minimum market requirements for such an application are $5000 credit card monthly sales and more than nine months duration in business.
A fast turnaround is associated with these funding applications. With merchants guaranteed of quick access to the cash advance. While it’s common for traditional commercial loans to take weeks and in some cases months, short term business loans are usually available within a week’s time after making the application. Irrespective of a business’ bad credit, this almost instant funding approval serves as an important asset or un-expected opportunity acquisition.
Short term business cash advances offer collections based on revenue. Repayments amounts are pegged on a borrower’s sales volume. This is to say those in times when a business is experiencing low sales, the lender receives an amount that is proportionate to the low sales volume whereas during peak sales the lenders monthly sum increases. This is arguable the most attractive aspect of a Short term business loan over other commercial funding options.
There exist numerous financing options for business owners, who are seeking that extra source of funds to inject into their businesses. The challenge many businesses face, especially those with bad credit or newly established businesses is the difficulty and sometime prohibitive requirements attached to some of the traditional business funding options available. The question of whether a Short term business cash loan is indeed the best funding solution, would have to rely on the availability or lack of other financing options with the present need for funding.