For many small businesses, a merchant cash advance is necessary at some point. It can help you out in a pinch if the majority of your sales come from credit card purchases. Even if they don’t, there may be times where a merchant cash advance is helpful.
An Overview Of Merchant Cash Advances
There are two ways that merchant cash advances are structured. The most popular way to get one is to take the cash advance and have the payment taken directly out of your business bank account. When you take this kind of cash advance, payments are debited from your business account on a daily or weekly basis, though you’ll incur fees for paying it back this way. However, it is also possible to take a cash exchange and then pay it back later with the credit and debit sales your business will make in the immediate future.
Making Repayments On A Merchant Cash Advance
When you make payments on a cash advance based on your credit card sales, you’ll pay a small percentage of those sales. This goes on until you have paid back the entire amount of the advance. In general, you have between three months and one year to pay this type of advance off. When you make payments on a cash advance based on paying it back on a regular schedule, the amount of each payment is determined by estimating the monthly revenue for your business.
Benefits Of Using Merchant Cash Advances
Though many business owners only turn to merchant cash advances as a last resort, there are some benefits to borrowing money this way. One is that it is among the quickest types of business loans to acquire. Another is that you will never need to put up collateral in order to get a merchant cash advance since it is an unsecured loan. But perhaps the biggest advantage is that if you take a cash advance based on credit card sales and your sales are low, your payments towards the advance will also be low.
For more information on how to acquire a merchant cash advance, please contact Park Cedar Commercial Lending.