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Should You Use a Merchant Cash Advance for Small Businesses Funding?

Many business owners shy away from merchant cash advances, not fully understanding what they are or how they stand to benefit from them. Even if they are aware of what this product is, they might still be unsure if they should use it as a small business funding option. If you’re still trying to decide, the following information will help you.

What is a merchant cash advance?

Contrary to popular belief, a merchant cash advance is not a loan. It is simply a sale. The alternative lender offers your business a lump sum of cash in exchange for your business’ future credit card sales. This amount (and at what discounted cost) is determined during the setup process and is agreed upon by both parties involved. The payback process entails your business making monthly installments, which are deducted as a set percentage of daily sales.

The advantage of using a merchant cash advance as a small business funding option is the speed in which you receive funds. Depending on the alternative lender you choose, your business can receive cash in as little as 72 hours – if not sooner. With a traditional bank, it could take weeks (or even months) to receive financing. If you’re business is in a dangerous cash flow situation, those funds could be too little, too late. A merchant cash advance, on the other hand, provides you with cash fast. Operations can continue uninterrupted, and you can seize opportunities before they pass you by.

Is a merchant cash advance right for you?

Merchant cash advances have become more and more popular because they have filled the growing need of the high-risk business. Traditional lenders refuse to work with business types and industries that they deem to be too risky. Those that typically fall within this category include startups, small businesses, seasonal businesses, those with bad credit, among many others. For these business owners, merchant cash advances are sometimes their only option for financing.

If your business has been denied funding, you struggle with a bad credit history, you need cash fast and/or you need to finance expansion, you should consider what a merchant cash advance can do for you. Not only is the advance released much faster than a traditional business loan, but it also involves much less paperwork. Bad credit issues and a limited time in business are not a problem. In fact, alternative lenders specialize in dealing with and helping/improving such situations. Overall, you might be surprised at just how much this financing solutions suits your needs.