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Should I Get a Cash Advance or Traditional Business Loan?

There are a variety of loans that small businesses can acquire. But many business owners must choose whether to pursue a traditional business loan or alternative avenues like a cash merchant loan. Knowing the differences between the two will determine how much a merchant can expect to receive, the paperwork required, when funds will be available, and other important factors. The following is a quick overview of the differences between traditional business loans and merchant cash advances.

Traditional Small Business Loans

Merchants that seek out a traditional small business loan must be aware of the qualifications, restrictions, and pay close attention to terms and conditions. Every loan program has specific forms and documents, but most ask for a personal background information. Some may ask to see the resumes of business owners or managers of the business. All loan programs ask for business plans with financial statements, cash flow, and balance sheets.

Traditional small business loans will generally only deal with merchants that have been in business for over 12 months. Also, traditional loans state very specific and legally binding loan requirements with a definitive date to which loans must be paid back.

Merchant Cash Advance

For businesses that have been operational less than 12 months, or have bad credit this may be a better option than pursuing a traditional small business loan. Businesses seeking a merchant cash advance only have to meet a few requirements, that’s because a merchant cash advance is not really a loan, it is actually a cash infusion based on sales that asks for a portion of future credit card sales. These terms are attractive to many merchants, as they don’t require merchants to pay back a specific amount of monies by a defined time.

Other advantages of a merchant cash advance include (1) cash flow friendly since merchants pay less on slow business days (2) no fixed monthly payment (3) no checks to write (4) funds received fast (5) merchant cash advances can be used for almost any business related expenses.

If you are starting a new business and need a quick, simple merchant cash advance – look no further. Contact FAM to attain working capital and alternative business financing.

Contact us to start your application today