A merchant cash advance allows your company to make payroll, expand operations or spend money on a new piece of equipment. Business owners who operate small or young businesses may want to turn to this type of loan if it has one or more merchant accounts and needs a low cost loan in a hurry.
What Do You Need for a Merchant Cash Advice?
A merchant cash advance is only available to companies that have credit card processing capabilities and have one or more merchant accounts. After you take the loan, it is repaid as a percentage of your credit card receipts each month. For example, if you agree to pay 10 percent of your credit card receipts each month, you will pay $1,000 on receipts of $10,000 until the loan is repaid.
When Would You Seek Out Such an Advance?
If you couldn’t make payroll at the end of the month, a merchant cash advance would be a good option for you. If you were looking at a tax bill that you couldn’t pay at the end of the year, a merchant cash advance could help you pay that tax bill. However, the merchant cash advance can be used for any purpose that you could think of.
Merchant Cash Advances Are Perfect for Young Companies
There are rarely any credit checks done by your merchant account company when you ask for a loan. As long as you make a certain amount of money each month, you can use that as collateral for the loan. When a small business owner goes to a bank for a loan, it is unlikely that he or she is going to get that loan unless the business has several months worth of consistent revenues. At best, you will need to take out a personal loan or line of credit to make ends meet.
A business owner who needs a loan quickly should opt for a merchant cash advance. It is a great way to use your credit card processing capabilities as leverage to get the money your business needs when it is needed.