Merchant cash advance is an option for business owners unwilling or unable to take out traditional loans. However, there are many disreputable providers in the market, and business owners need to be prudent.
Do your homework as you cash advance would before taking out any other loan. Having a clear plan to repay the advance quickly is a good way to reduce the overall cost of the merchant cash advance.
The best thing about MCAs is the time taken to process them. All that the provider is interested in, would be your credit card sales volume and if you can prove you have good volume, you get the cash immediately. There is no need to worry about credit score and other documentations.
You don’t feel the pinch
Since there is no fixed amount that is to be paid daily, you don’t really feel the pinch of paying back the loan here. You need not worry about saving up the amount needed to pay back the provider.
An MCA can definitely be beneficial for many businesses, which are in need of urgent cash to take care of their expenses. However there are certain things these businesses have to consider before applying for such an advance.
First thing is they have to make sure their credit card sales volume is very high and they are left with enough money to take care of their operating costs after paying back the provider. Another thing they have to understand is that there are many kinds of costs involved with MCAs. It may prove costlier than a regular loan. The percentage of the credit card sales they have to pay is also quite high.
Although there are drawbacks, the benefits of MCAs surely outweigh them. If you have done your homework well and feel that you could benefit from such a cash advance, it would be a really wise decision to go for a merchant cash advance!
Merchant cash advance or business cash advance is perfect for business owners that have difficulty securing traditional business loans or funding. Businesses that are starting up or do not have regular cash flow cannot guarantee regular payments. Unlike loans, merchant advance is not repaid with monthly installments on fixed dates. This helps business owners as the cash advance needs to be repaid only with credit card receipts.
Though loans and merchant cash advances work differently, neither should be taken out without due consideration to certain factors.
Credit card sales vs. Credit score