Merchant Cash Advances – A Boon For Small Businesses Like Deli’s
and Food Trucks
Finance is an ever-growing market, with several innovative options
available for small businesses today. Merchant cash Advance is one
such innovation. It is basically cash that is given up front against
repayment through a portion of future credit card sales. So, where
the small businesses look for business funding to replace outdated
machines, expand their business, finance purchase of new equipment,
introduce new products/services, Business Cash Advance should be
considered as an option. Typically, businesses such as Bagel Shops or
Corner Shops are unaware of alternative options for loans.
Merchant Cash Advance?
banks work completely based on credit history. This means that your
small business or new business should have the credit worthiness to
qualify for any kind of financial assistance from the bank. An
unsecured business loan will be granted if your credit history-
adequate cash balances in your account, quick and full repayment of
dues etc. is perfect. Not everyone has the perfect credit score and
is able to wait for the approval of a bank loan.
businesses face several pressures to survive or in some cases to beat
the competition. In the process to overcome those hurdles, they need
working capital to cover those costs and most of the times the need
is immediate. The merchant cash advance works very well as an
alternative since it provides you the cash quickly allowing you to
continue your day-to-day operations.
Card Factoring as it is often referred to (not to be confused with
the illegal one where a duplicate merchant account is used for
transactions) works very well when you are short on time and have the
credit card sales to be able to repay the advance. For instance, Food
trucks have tremendous sales through cards (at lunch time or snack
time) but to make changes in their equipment, they need cash.
Kind Of Businesses Qualify?
you are a small business, such as a Deli, Food truck or a Pizza shop
in urgent need of working capital and want to try alternative funding
solutions, and are looking for an advance, not a bank loan then a
merchant cash advance is the right option for you. To qualify, you
should ask yourself if you qualify on all the below:
business is in urgent need for working capital.
have enough of transactions processing through your credit card
machine to be able to repay the advance
bank account is in an NSF status which means that you do not have a
cash balance in your account. Having insufficient funds (cash) will
not qualify you for a Bank Loan easily.
are in a brand-new business and have not had time to set up your
have a history of credit card receipts to prove that you can repay
the cash advance.
For The Advance:
this is an advance and it is not a loan it does not go through the
lengthy process of application for a loan.Such small-time shops do
not have the acumen to gather documentation required by banks.
Typically, a merchant cash advance can be approved within 2 hours of
application and up to a maximum of two days depending on the
documentation. All you will need to provide for the advance are:
application Form complete with your details
pan or tax number
card receipts for the last 3-6 months
bank account details (for deposit of the advance)
One of the biggest advantages of taking
a business cash advance is the speed with which you can use the
cash. Most of those who provide such loans will be able to give you
the cash within 24 hours, maximum of 48 hours. Typically, the people
who opt for such loans are the one who is looking for a quick cash
infusion to the business. In such cases, merchant cash advances work
documentation as mentioned is minimal and hence no fine print. You
do not have to worry about working out the interest rates and the
final cost of the loan to your business and neither must you read
through the loan terms. It is straightforward and easy to
the advance is not like your typical loan repayment where you worry
about having to pay a certain sum every month. This advance allows
you to repay the sum through your credit card sales. While some
months may be good allowing you to repay more, the month’s where
your sales are not great, it will be lower.
best part of such an advance is that your credit score or your
credit history does not matter. Involvement of the bank involves
many procedures. Depending on the kind of loan you prefer, if a
collateral is involved, you may have additional processes. So,
unlike commercial loans doled out by banks which are based on your
financial standing, the advance is much easier to get.
huge advantage of these advances is the 1st
position and so on. These positions simply refer to when a business
is unable to pay the first cash advance. To take a new or additional
advance they will need to approach a funder who is willing to buy
the initial amount and give a new advance.