Merchant cash advances have become one of the most popular forms of financing for the small business owner. In fact, the majority of consumers choose a merchant cash advance over a traditional business loan. One of the reasons being that you can obtain a merchant advance even when bad credit is an issue.
A small business loan has strict credit requirements. A merchant cash advance, on the other hand, is a more simple and flexible program. For example, 1st American Merchant Funding will approve applicants with credit scores below 500. In addition, once approved, these funds become available within 72 hours.
The leniency in regards to credit is possible since a merchant cash advance is a sales transaction; thus, they are not reported on credit reports. In addition, no collateral is required. This makes it much easier for startups to receive funding. Small business loans differ with their strict requirements and long waiting times.
Be sure that you do some shopping before you decide on a lender. The cash-advance business is very competitive, so be sure you are receiving the best options for you specific needs. It is also extremely important that you understand the terms of the agreement.
Some loans involve a fixed daily amount that will be taken from your account while others are based on a percentage of your daily credit card sales. Also be sure that you correctly understand what the percentage rate means for you. The figure you are given, say 10%, is not necessarily the effective interest rate you will be paying.
While you may not be eligible for a small business loan because of your credit score, a merchant cash advance could be the answer to your present situation. Take time to compare lenders, their requirements and their benefits.
Unfortunately for business owners, there are no signs that the relationship with the banking system is going to become any easier – especially if you are struggling with bad credit. When turning to a bank is not an option, consider a merchant cash advance.
Don’t let bad credit limit the productivity of your business!
