Today business owners favor Merchant cash advances over standard loans. Undoubtedly, that’s enough reason to shed light on why this funding alternative is gaining popularity over the most popular financing products that small business owners have relied on for decades.
What is an MCA?
Most business owners mistake a merchant cash advance for a high-interest advance or a short-term loan. But in reality, it is a sale. Contemporary lenders like FAM buy your upcoming sales at a discount. The borrower and lender settle on the amount of sales being purchased and at what discount.
You can access MCAs without having to go through thorough credit profiling and tedious application processes. Most MCA providers look past credit scores and bank statements to approve a business for a cash advance. Often, they review a company’s day-to-day credit card sales and whatever project you want to complete with the funds and come up with a remedy that works for both parties.
Cash Advances vs. Business Loans?
Business Loan
- Collateral is needed
- Strict Credit score Requirements
- Long waiting periods for Funding
- Complex Contracts
- Too much paperwork
Cash Advance
- No guarantee required
- No stringent credit score checks
- Funds available in 48-72 Hours of application
- No complicated contracts— simple, flexible programs
- No Financials or Tax returns needed
Why Tap into MCAs
Easy Approval: approval is based on the performance of a business rather than period of operation, personal credit, or financials.
Fast Funding: Most MCA programs get finance in your business account in as soon as 72 hours.
Trouble-free Payback: Payments are automatically remitted from your credit card sales. There are no fixed per-month payments.
Easy Renewals: Once approved borrowers can renew their advance as soon as they’ve paid 50% of their balance.
Collections based on Revenue: With an MCA, you pay back when you get paid. Payment is remitted as a percentage of day-to-day sales, so you pay back less on a slow month and more on a high-sales month. This kind of flexibility enables businesses to pay back their advances without struggling.
No Impact on your Credit reports: Cash advances, unlike small business loans, are in essence a sales transaction, which means they aren’t included on your credit reports.
No Collateral needed: With MCAs, you do not need to secure the funds you borrow with any form of collateral.
Wrapping Up
Merchant looking for stress-free borrowing should consider cash advances. They are easy to get and pay back is hassle free.