MERCHANT CASH ADVANCE

WHAT IS A MERCHANT CASH ADVANCE?

Merchant Cash Advances are a type of company financing that helps firms get the cash they need in a more flexible way. The lenders will advance the company money, which the company will repay with a portion of their customers’ card payments.

Merchant Cash Advances are ideal for a wide range of enterprises. Compared to more traditional formats, this type of financing is a lot easier to obtain. A merchant cash advance is a financing option for businesses that need capital to expand but have a poor credit history and no/few assets.

Merchant CASH ADVANCES have only been around for a few years, but they are already proving to be popular in the retail and leisure industries. It is regarded as one of the most innovative alternative business funding tools.

Companies often secure merchant cash advance financing by employing business card terminals, to put it another way: The repayments are then calculated as a percentage of the money generated by the card terminal, making it a convenient and rapid finance option for SMEs, ideally for firms with no assets but a high frequency of monthly card transactions.

CAN I GET A MERCHANT CASH ADVANCE?

Many firms are unsure if they will be able to take advantage of these finance opportunities. In theory, any business that accepts payments through a card terminal can get a merchant cash advance. Because the lender can rapidly see how much money the company produces on a monthly basis, they may agree on a funding amount and repayment plan much faster than with other funding choices. It’s an excellent option if your company doesn’t have any valuable assets or simply needs cash quickly.

MERCHANT CASH ADVANCE HOW DOES IT WORK?

The usual way a Merchant Cash Advance works is that the business borrows money from a lender and then repays it monthly via credit card payments from customers.

It’s a quick and simple approach for a lender to see if your company qualifies. This can be accomplished by collaborating with your business card terminal supplier [the company that handles the transaction]. The lenders would then be able to monitor exactly what is going on with the company and how much money is flowing through it.

Because lenders can see the cash flow in your firm, they can adjust the funding and repayments to fit your needs. As a result, Merchant Cash Advances are a very flexible lending option. Giving you additional assurance when it comes to making payments.

The amount of money a company can borrow is determined by a number of factors, including:

  • The typical turnover of the company.
  • Affordability of repayment (in the lender’s opinion.)

There are a plethora of Merchant Cash Advance lenders available. Funding Xperts can assist you in finding the best lender for your specific business needs and circumstances.

WHAT IS THE BENEFIT OF A MERCHANT CASH ADVANCE?

The following are the three most significant advantages:

  • Finance that is adaptable and scalable
  • Simple repayments
  • Creates opportunities for other sources of finance

IS IT A SMART IDEA TO TAKE OUT A MERCHANT CASH ADVANCE?

Despite the fees associated with this lending option, Merchant Cash Advance has numerous advantages for businesses.

  • Quick access to money — in many circumstances, lenders can respond within 24 hours with a discussion. This is especially useful for businesses that can’t afford to wait weeks for a response from a lender.
  • Simple application process — only a small amount of documentation is necessary. In the vast majority of circumstances, the business will not be required to provide collateral [i.e., your assets] such as a car, property, or other valuables.
  • Automatic repayments — Because the loan installments are made automatically through card payments, you won’t have to worry about late fees, and there is no minimum payment. Therefore, the more money you receive from card payments, the faster you’ll be able to repay the loan. Yes, it will take longer to return the loan if you have months with less card payments, but because there is no minimum, you will not be charged any additional fees.

WHAT ARE THE DISADVANTAGES OF TAKING OUT A MERCHANT CASH ADVANCE?

There are some disadvantages to Merchant Cash Advance, just as there are some advantages.

  • The amount you can borrow is determined by your business turnover – for example, if you wish to borrow £6000, but your monthly business turnover is £1000, you are unlikely to be approved for that amount because it is not in line with your cash flow.
  • If your business gets payments in a variety of methods, a Merchant Cash Advance may not be the best option for you, however, it’s great for companies that take the majority of their payments through card terminals or receive regular bank transfers.

Finally, many lenders only engage with specific terminal providers, limiting your lender options based on the providers your company uses. Some lenders, on the other hand, collaborate with a variety of card terminal suppliers. Traditionally, the leisure sector [bars, restaurants, clubs, and stores] has been the most difficult to find a finance for. A Merchant advance, on the other hand, could be a quick and simple approach to receive business funding if the cash flow is positive.