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Make Your Merchant Account Work For Your Manufacturing Distribution

Everyone who runs a business today has a merchant account which is nothing but an account to hold all the money from your credit card transactions. But did you know that this very merchant account can help you get some quick financing for your manufacturing distribution business? Now you do!

A distributor is a link between the manufacturer and the retailer. However, when you are a distributor manufacturer you cut down your expense on a distributor. New and small scale businesses who cannot afford a commercial distributor work as their own distributors and are called as a commercial distributor manufacturers.

Reasons why commercial distributor manufacturers need financing

Though the role of a distributor may seem straightforward, many changes in the recent times require them to change too.This is especially true when you are your own distributor. Here are the reasons why you will need financing.

  1. New equipment

With changes in the way, businesses are operating your commercial distribution business might need capital to invest in new equipment.

  1. E-commerce

E-commerce is not just all about shopping online anymore or having a website for your business in place.Customers look for improved sales with options like omnichannel, rich user-experience websites, more user-friendly online shopping websites, and marketing using social networking sites.

  1. Back-end systems

Even back-end systems such as those involved in shipping, inventory management, accounting, client management etc. need a change. This is because a weak or inefficient back-end system can affect supply chain and make all other changes ineffective.

  1. Payroll related expenses

From time to time, businesses will require capital to keep their workforce and talent well-paid. The loss can be compensated when sales pick-up.

  1. Expansion

With the distribution business, more space equals more business. So when you need to expand your distribution business you will need capital to invest in more space for your warehousing needs.

  1. Customer service

This is one area that requires constant improvement no matter what your business. Upgrading services to maximize customer satisfaction and experience also requires capital.

Business financing options

When it comes to short-term financing, a number of options are available to businesses as shown below.

  • Bank loans

  • SBA (Small Business administration)loans

  • Line of Credit

  • Invoice finance

  • Alternative loans

  • Merchant cash advance

But in terms of quick loan disbursal and convenience, merchant cash advance wins hands down for businesses such as commercial distributors. This is especially true if yours is a start-up business.

What is merchant cash advance?

Merchant cash advance is quite literally using your credit card transactions to obtain a loan and repay it. Instead of submitting various forms and proof of collateral, a merchant cash advance provider will simply look at your credit card transactions history to determine how much loan you are eligible for. Then you repay the loan as an agreed percentage of your daily card transactions.

Advantages of merchant cash advance

For small and new businesses a merchant cash advance is a quick way to build capital for short term use. This type of loan has many advantages over other types of loans as shown below.

  • They are easy to apply with simple online applications

  • All you need apart from your credit card statement is your tax return papers and your bank statement

  • Merchant cash loans have a high approval rate of more than 98%

  • You can get your funding in a matter of days with typical processing time ranging from 1 to 3 days and as little as a couple of hours

  • In cases where a traditional bank loan is not accepted, you can apply for a merchant cash advance

  • Even if you have bad credit, poor credit or many NSFs (No sufficient funds), you can still apply for a merchant cash advance

  • Repayment is easy as only an agreed percentage of the daily sales is paid to the merchant

  • Repayment is quick as the period ranges from 6 to 12 months

  • The repayment amount is automatically debited from your merchant account on a daily basis

  • There is no restriction on what you can spend the loan amount on

  • There is no monthly interest rate to worry about

  • There is no need for a collateral to be eligible for the loan

Additional position advance funding

Financing is never a one-time affair, especially when you are a small scale business. That is why merchant cash advance options go one step further and provide what is called as Additional position advance funding.

To explain it in simple terms, you can apply for a second cash advance even before you completely repay your first advance. This is called as second position funding. In fact, you can take another after your second one and even multiple ones. Accordingly, they are names as 3rd position, 4th position and so on.

This is also called ‘stacking’ and merchant cash advance providers are let you consolidate these additional position funds into one for easy repayment.