Any business could potentially encounter difficult times. Significantly, 82 percent of business failures result from cash flow problems, but there can be other unexpected difficulties. The solution can be a merchant cash advance which can be used for essentially any business expense including paying employees, making equipment repairs, purchasing inventory, filling in working capital gaps, dealing with seasonal costs, and more.
How Does a Merchant Cash Advance Work?
A merchant cash advance is simply a way for a business that collects payments through cash, checks, or credit cards, instead of invoices, and has a high volume of sales, to get funds quickly. When cash is needed quickly, other options are usually limited.
A merchant cash advance means that a lump sum is provided upfront, and the advance is paid back with a percentage of daily credit card sales, less a fee. Loan amounts can typically be achieved in amounts of up to $200,000 or more and funding can be received in as little as 2-3 days. This can be a good way, for example, to repair a piece of equipment that unexpectedly broke, or to seize an unanticipated opportunity.
What are the Advantages and Disadvantages of a Merchant Cash Advance?
A merchant cash advance offers the advantages of fast application, fast processing, and fast funding. Merchant cash advance lenders are not held to the same intensive regulations as traditional lenders so the process can be greatly expedited. There are typically more lenient qualifications and a flexible payment schedule. In addition, there are high borrowing limits, there is no collateral required, and the funds are usable for any business requirement. A disadvantage is a potential for a high-interest rate.
How to Qualify for a Merchant Cash Advance
Qualifications typically include 1+ years in business, $50,000 in annual revenue, and a 500 minimum credit score. An online application will typically get lots of detailed business information.
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