Merchant Cash Advance - Top Reasons It Is Preferable Over Funding From Bank Or A Line Of Credit

Are you looking for an instant funding option for your business? Is the credit crisis slowing down your business? Is a poor credit rating making it difficult to pump your business with the money it requires? Are you tired of the rigmarole involved in getting a loan approved? Are you praying for a way to get funds in a quick, straightforward and efficient way? If yes then a (MCA), also called a , is the solution to all these problems.

Merchant cash advance offers small and mid-sized businesses a speedy and trouble-free means of acquiring finance for things like maintaining inventory, settling invoices to keep the wheels moving and for growing the business. With merchant cash advance, you exchange a portion of credit card receipts for an advance of cash. MCA providers charge a fixed fraction, typically in the neighborhood of 8 percent of average credit card receipts in a month. If the recession induced shaky credit reports or guarantee prerequisites are stopping you from applying for bank loans, then an MCA is especially a helpful choice for you.

MCA offers various advantages such as described below.

1. No collateral at stake

Merchant cash advance is an amount paid in exchange of your sales receipts and not a loan. Hence, if you are unable to pay back, it does not impact your credit report unlike business loans that can create chaos in your credit report. You also do not face the risk of losing pledged security, making MCA a comfortable and secure alternative for your business.

2. Straightforward application and payment process

Most MCA providers offer an online option to apply for it. Submitting the application is quite simple as it does not involve entering tax returns, financial statements or business plan as accompanying credentials.

MCA providers approve applications on the basis of on two factors - monthly credit card sales volumes and number of years in business - to judge your financial fitness for receiving the advance and calculating the amount. Typically, you should see monthly credit card receipts amounting to at least $5000 and a minimum of nine to twelve months in business to be considered for funding.

3. Quick turnaround

Since merchant cash advance does not involve a lot of documentation, the application turnaround time is quite short. With MCA, you can get the funds in 4-6 days from submitting the request. This is a huge advantage over conventional commercial loans that impose waiting periods of weeks or months, keeping you from settling your bills, buying inventory, paying your employees and maximizing on emerging opportunities.

4. Good approval rate

MCA providers value your current business performance over credit score. Even if you haven't got a very good past record you can still procure an advance without being discredited for a poor credit report. Your average credit card sales in the last few months will be factored into calculating the approved MCA funding amount.

5. Revenue-based collections

Unlike traditional bank loans with unchanging monthly installments, MCA links repayments directly with your monthly credit card sales. You must pay a fixed cut of your monthly sales. When your business is thriving you pay more. When your business is slow, you automatically pay lower sums. Thus, at no time does MCA repayments become a heavy financial liability on your business, straining bottom lines even more.

While these benefits are significant, MCA gives you much more. It gives you a competitive edge by enabling you to avail growth opportunities without losing valuable time. Remember, time is money. If you keep waiting for a bank loan to get approved, you are working against your business interest. Opting for a merchant cash advance over a conventional loan can help you to pursue your business goals. Daljeet Sidhu is the author of this article.

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Tagged as: business cash advance, business financing, business loan, merchant cash advance