Maintaining healthy cash flow and sustaining business growth are integral aspects of entrepreneurship. To achieve these goals, business owners often require outside financing. Here are some details to help you determine if a merchant cash advance is the right solution for your company.
What a Merchant Cash Advance Is
A merchant cash advance is a form of alternative financing in which you receive a fixed advance against your credit card receivables. You pay back the advance plus a percentage fee for the financing company on a daily, weekly, or monthly basis. Fees, percentages, and repayment methods tend to vary greatly from one provider to another, so it is imperative that you are aware of the details in your agreement with the financial institution before you accept a merchant cash advance.
Most businesses that have regular debit and credit card sales are eligible to receive a merchant cash advance. Industries that often use this form of financing include hotels, restaurants, gas stations, and convenience stores. The business owner’s personal credit is not a significant factor in the application process, and providers do not usually require collateral. You simply need to fill out a short application and submit statements from your bank and credit card processors.
Advantages of Merchant Cash Advances
One of the outstanding benefits of a merchant cash advance is the speed with which it is processed. Once you submit your application, you usually have the money in your hands in a matter of days or at most a week or two. This allows you to take advantage of unexpected opportunities that come up such as chances to take on more business or a temporary window of reduced prices for inventory or equipment. Merchant cash advances also help you maintain healthy cash flow in the face of unforeseen emergencies.
For more information on merchant cash advances and other forms of alternative lending, get in touch with Span Capital.