When browsing lenders for a merchant cash advance, you will generally come across two different types - direct lenders and brokers. They can both allow you to get the cash injection your business needs, but they operate in different ways. Knowing the differences between MCA direct lenders and brokers is important if you're going to get the right loan for your circumstances.
- What is a direct lender?
- What are the benefits of direct lenders?
- What is a broker?
- What are the benefits of brokers?
- Is one better or worse?
- Which is right for you?
What is a direct lender?
A direct lender is, as the name implies, a lender who directly loans you the money you apply for. So when you apply to the lender, if you’re approved the money is going to come from their business. There are no third parties, and no other companies are involved.
What are the benefits of direct lenders?
The benefit of a direct lender is that it streamlines the application process. You make one application to one lender, and they decide if they’re going to approve it. If they do, the money will be paid into your account directly. A direct lender can also make sure they have all of the information they require from you, where a broker may need to push you for more details if one of their lenders requires them.
You can also save money by applying with a direct lender, as there are fewer fees to worry about. When you apply with a broker, you have to take into account the different fees of the lenders the broker is submitting your application to. Then there’s the broker’s fee itself, which can be considerable.
What is a broker?
MCA brokers operate by taking your application and then providing it to a number of different lenders that they work with. The lenders will then go through your application, and if you meet their requirements they will offer you the merchant cash advance.
What are the benefits of brokers?
The benefit of a broker is that you only need to make one application to get offers from a number of different lenders. All lenders have different terms on the loans they offer so it can save you time versus applying with each lender individually. If you’re unsure about the best merchant cash advance for you, it allows you to easily contrast and compare the different offers to see which is most appealing to you.
Another benefit is that you have more of a chance of being approved for your merchant cash advance if you have a poor financial history. As your application will be submitted to a number of different lenders, you have more of an opportunity to find one that will be willing to grant your loan.
Is one better or worse?
The simple answer is no. Direct lenders and brokers operate in different ways, so they’re going to appeal to different people – there’s no right or wrong way to apply for a merchant cash advance. Make sure, however, if you do apply via a broker that you thoroughly research each company that makes you an offer on your application before you accept.
Which is right for you?
Generally speaking, most businesses are better off applying with a direct lender, because as long as you meet their requirements you will be accepted for your loan much faster. Capify, for instance, simply requires 6 months in business, with appropriate documentation, and at least £5,000 per month in card transactions. If you satisfy those simple conditions, you’re already most of the way there – you’ll also avoid running into extra fees and sneaky charges.
If you’re interested in applying for a merchant cash advance, do so with a direct lender you can trust – contact Capify today, or apply online.
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