If you're a small business looking for business working capital, you might assume that your only option is to head to the bank and try to take out a loan. However, this is not your only resort. Small businesses may benefit more from a merchant cash advance, which is very different from a loan. Before determining what is best for your future company, it's important to know the differences.
With both a merchant cash advance and a loan, you're going to get money, but that's about all they have in common. One of the best benefits of a cash advance is that you have a much better chance of being approved and quicker approval rating. Many banks are condemning more and more people for small business loans because of the state of the economy. Also, when you apply, it could take anywhere from one to four weeks to find out if you are even approved. Who has that much time when you're trying to start a business? You can know within a few days and your odds are good if you can show a good track record of credit card receivables.
The reason for a speedier process is because there is less paperwork involved. Cash advance providers are not subject to state and federal regulations either. With bank loans, you always need collateral, such as your home. This is not necessary for a cash advance. Nor are there any restrictions. You can use the money however you wish. There is also no fixed payment schedule to worry about. When you have a loan and business is bad, the bank does not really care. You are required to make that payment or face penalty charges.
So how does a merchant cash advance work? The provider purchases future receivables at a discount. They give you the cash now and you give them a percentage of your daily credit card transactions until the amount has been paid. So if business is not doing that well, it's okay. They only take money when you make money, essentially. Yes it may take a bit longer to repay them if sales are not what you rented, but it's better than running your business into the ground because you have to pay the bank back.
In this economy, a bank loan is hard to come by, but do not let your dream of starting your own business die because you were not approved. Consider all the great benefits to using a merchant cash advance and turn your dream into a reality.