Cash advance repayment schedules are normally volume-based in nature and as such the process can be quick or slow depending on the company’s revenue.
It’s also noteworthy that the length of repayment does not impact the amount required to be repaid because of the fixed nature of the interest on cash advance. Cash advance is therefore flexible and allows for multiple options for repayment.
Asset-based cash advance
An asset based cash advance involves attaching a lien to an asset such as a fixed portion of inventory or a piece of equipment. This in effect gives the provider a risk-free way to seek repayment in the event that the lender cannot collect that repayment from the business owner.
This cash advance option is secure and favorable for the part of the lender. It also favors the business in that if it is unable to make the repayment, the asset can offset the debt. This option is therefore favorable for businesses that can experience severe downturns in their revenue.
ACH cash advances
A merchant can obtain an ACH loan by entering into an agreement with the cash advance provider; the lender defines terms of repayment and the repayments are automatically deducted on a fixed schedule from the merchant’s bank account.
An ACH loan provides a number of benefits to the borrowing merchant. You can get a cash advance of this type from the First American Merchant and be sure to enjoy loan amounts that are based on your revenue and not your credit viability, more reasonable borrowing requirements, and a fixed repayment cost that is far more forgiving than the accruing interest that you’d otherwise get on a bank loan.
Real estate cash advances
With the real estate cash advance, the lender gains the rights to an asset in front of the borrower who is generally the holder of that asset. This repayment option is considered flexible and provides the lender with additional guarantees while at the same time giving the borrower the ability to pay back the lender in a specified time frame.
Different merchants will prefer different types of cash advance. Whatever your preferences are, these options are a great method of acquiring working capital, with the various repayment options providing merchants with varied options suited to their specific businesses.