If you are running a business and are finding it difficult to qualify for and obtaining a loan from your bank, merchant cash advances may present one of your most viable alternatives. Cash advances can be particularly convenient when you are experiencing a cash crunch but are confident that the business' has sufficient cash flows to service the debt. The requirements for getting the advance are not as stringent as applying for a loan. One only needs to be over 18 years of age, have a dependable source of credit card sales income and have a checking account. Processing, approval and disbursement also takes place quickly making it ideal for those times when you need money at short notice.
There are several benefits of getting cash advances from merchants.
* Rapid turnaround time – Even though when the amount a business pays merchant cash advances is more than the principal and interest they would pay on a conventional bank loan, the short time within which the loan is approved makes this a particularly handy credit facility when cash is required urgently. Many businesses consider the high cost of the advance to be a less significant problem than the urgency of accessing cash for the business.
* Merchants place little importance on your credit history – For conventional loans, you must demonstrate a clean credit history. If you have a low credit score, the chances of approval for a loan are slim making borrowing difficult. With cash advances, you only need to demonstrate that your business has been receiving credit card sales over the past 60 days. Evidence of cash flow is much more important than credit history when it comes to merchant cash advances.
* Little or no security required – Merchant advances only need receivables for your credit cards as security. Contrast this with the rigorous requirements when applying for a conventional business loan – you will not only have to submit proof of ability to pay but also provide security such as business equipment and property.
* Less risk to your assets – In case you are unable to pay back the cash advance, the merchant has to absorb the loss. This is unlike a conventional loan where the lender can possess all items you provided as security and proceed to take you to court to compel you to pay up the outstanding amount.
* No faxing – There are a number of companies that can provide merchant cash advances without the need of the applicant to fax documents providing their identity. The company will simply use the information you provided on the application form to verify your details and disburse the cash advance if you do qualify.
* Online service – You no longer need to visit the awards of a factoring company in order to apply for and receive the advance. With many factoring companies now providing online service, you can perform the process end to end in the comfort of your home.