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finance merchant cash - Posted at 10:45 AM on 10/22/2019 by terencerutle717

Consider the following when choosing between a SBA loan and a merchant cash advance.

Minimal financial documentation required

If you are the owner of a well-established business, SBA lenders will ask you for current debt, loan balance and payment schedules, along with available collateral. New business owners must attach a business plan that reveals monthly cash flow projections for the first two years along with the SBA loan application. To determine your eligibility for the loan, lenders may consider credit card debt, liquid assets, personal loans and financial statements, tax returns and holdings of real estate.

With MCA you only need to provide two pieces of information, monthly credit card statements and the number of months in business. These two factors alone will determine your eligibility and what your loan amount will be.

Higher approval rates

Banks are cautious lenders. Even though SBA facilitates the loan, you receive money only if you can convince banks and brokers that you will be able to repay every penny on the loan. The volume of financial documentation evaluated coupled with lender caution reduce the chances of loan approval. The economic downturn has made it even more problematic to procure SBA loans.

Merchant advance providers, on the other hand, evaluate only your credit card receipts and number of months in operation. Unlike SBA loans, merchant advance laws do not include low FICO score and earlier bankruptcies as denial criteria.

High repayment flexibility and lower risk

With SBA loans, you cannot negotiate repayment terms after receiving the loan. Repayment schedule is fixed and incurs heavy penalties on breach. Banks may cease and sell-off your business assets, and even personal assets including your home and car in case of loan default, thus making SBA loans very risky in economically fragile environment.

Merchant advance offers a flexible repayment schedule. Every month you are required to pay a fixed percentage of your credit card sales. When your business is booming, you pay more. When your business faces the heat, the repayments don't stifle it further. The risk of default is thus minimal.

This is because they are more into the business credit card sales and not the owner per se.

Business line of credit online, merchant funding and bank loans sometimes serve as the lifeline of several entrepreneurs. A merchant cash advance would be best for the entrepreneur who needs short term funding to give his/her business a chance to thrive and grow bigger.

Opens Doors to the Financial World for Many Retailers. The merchant cash advance industry is growing at an astonishing clip. This growth is because traditional banks are not meeting the needs of small businesses.

This product is very unique. It's a purchase of an asset, not a loan, so we have to use specific language consistent with a purchase of an asset, like retrieval rate and discount rate instead of interest rate. A lot like factoring but it's of a sale that hasn't yet happened.

A cash advance provider gives merchants a lump sum cash advance up front. In exchange, merchants agree to pay back the principal and fee, by giving the company an agreed percentage of their credit card sales until their balance is zero. This percentage is between 12%-24%. Merchant Cash Advance: The Best Solution for Restaurants, finance merchant cash, finance merchant cash

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