There are many reasons why credit market availability can change; an economic recession or a business being categorized as “high risk” serve as two examples. When this takes place, many businesses turn to a new solution – a merchant cash advance.
What is a merchant cash advance? A merchant cash advance is an alternative source of business funding for entrepreneurs. These entrepreneurs may lack the credit rating or collateral that is required to obtain a commercial bank loan.
It should be noted, however, that a merchant cash advance is not a loan. It is a purchase of a portion of a business’ future credit card sales at a discount. While the merchant cash provider buys the right to retrieve a portion of the business’ credit card sales each month, the business is able to receive a lump sum that is paid to them at the outset of the agreement.
There are multiple reasons why a merchant cash advance is a great alternative:
- Applicants with Bad Credit are Accepted. A history of bad credit can prevent you from obtaining funding from a traditional lending source. However, one of the advantages of a merchant cash advance is that those with bad credit are still accepted, even if their credit scores are below 500.
- The Approval Rate is High. Small business loans involve strict credit requirements, complicated contracts and extensive documentation. Since merchant cash advances are not based on personal credit, time in business or financials, the approval rate is high.
- No Credit or Collateral is at Stake. Another advantage is that a merchant advance is not a loan; it is a sales transaction. Because of this, they are not reported on credit reports and do not require collateral like a business loan.
- Easy Application Process. A commercial loan can take weeks or even months to finally be processed. A merchant cash advance, on the other hand, can be available within the same week that the application is processed.
- Simple and Hassle-Free Payback. The application process for a merchant cash advance is not only simple and hassle-free, but so is the collections process. A merchant cash advance payback is revenue-based. Meaning, when you have a busy month you will payback more, and when you have a slower month the payback amount will be less. This percentage-based collection policy allows a business to grow instead of draining its funds.
When applying for a merchant cash advance with 1st American Merchant Funding, you will enjoy all of these advantages: a high approval rate, fast funding and easy renewals, simple “no-hassle” payback, revenue based collections and no credit or collateral on the line. In addition, if your business has been labeled as “high risk” or you struggle from a history of bad credit, 1st American Merchant Funding still has a merchant cash advance for you. Take advantage of the quick and easy application process.