Choosing the right merchant cash advance lender for you
Finding the best merchant cash advance lender for your business can be tricky. With a variety of lenders out there all providing a wide variety of different offers, it can be difficult to know where to turn. It’s important to invest the time necessary to find the right merchant cash advance lender for you, however. Doing so will allow you to unlock the vital cash injection required to help take your business to the next level.
So, how do you go about getting the right merchant cash advance for your business? We’ve detailed three key steps below.
- Step 1 - Establishing the details
- Your ability to repay
- Repayment terms
- Knowing each lenders the fees
- Finance calculators
- Finance term length
- Provider lending limits
- Lender reviews
- Application process by provider
- Step 2 - Your circumstances
- Step 3 - choose your lender
Step 1 - Establishing the details
Before you begin thinking about the right merchant cash advance lenders, you need to know exactly what sort of merchant cash advance you’re looking for. You won’t know you’ve found the right lender, until you know what the right loan is. Consider the following.
Your ability to repay
It’s important that you strongly consider what you can afford to borrow, rather than what you need to. Remember that you will have to make regular repayments, otherwise, you’ll run the risk of defaulting on the loan. If you do that, your business might end up in even worse financial shape. Take stock of your finances and give yourself a realistically attainable figure for your regular repayments – use that to determine the amount you request.
Not all merchant cash advance providers have the same terms on their loans. Some may allow you to pay more when you can afford to, or less when you need to. There may even be the option to take a “repayment holiday”. If you need a certain amount of flexibility in your payment terms, it’s highly important that you know this before you start making any applications. Understand the leeway you might need and the best repayment schedule for you.
Knowing each lenders the fees
You can easily be swayed by offers of low-interest rates and attractive repayment plans – but what’s more important is knowing what fees you will owe. Make sure you ask your chosen lender upfront before you finalise your application if there are any fees that you don’t know about. This may be in the form of transaction fees, administration fees, late repayment fees, etc. Many lenders do not advertise them, and they can quickly become prohibitively expensive.
If you want to have a clearer picture of the loan you’re going to be taking, many merchant cash advance lenders offer tools to show the specifics of the loan. With a calculator, you’ll be able to see important information such as your total payment term in months, the total amount repayable, and your overall interest rate. Knowing this data is highly important if you’re going to find the right merchant cash advance to suit your circumstances.
Finance term length
Depending on how much money you’re borrowing, you may want to pay your loan back as quickly as possible. You’ll be paying more in terms of repayments, but you will prevent the interest rates rising. Similarly, if you want to keep the repayments as manageable as possible you may prefer to have a longer-term loan with smaller monthly repayments – it’s always best to shop around. See the options available to you, to determine the right MCA for you.
Provider lending limits
Certain merchant cash advance providers have strict limits in terms of how much money they’re willing to lend. It may not be a big problem if you’re looking for a relatively small loan, however, if you need a larger cash injection you’ll need to make sure the lender in question can even offer you the money you require. Most lenders will clearly display their upper loan limits, but if you’re not sure, ask. Capify, for example, offers between £3,500 and £500,000.
Making sure a lender is right for you also requires you to know about the reality of their service. To do this, you need to read what customers really think. Make sure you seek out customer reviews that give an accurate portrayal of the company’s overall service quality – from people who have directly experienced it. Ensure that these reviews are trustworthy. Capify, for example, relies on Trustpilot to accurately display what our valued customers think of our service.
Application process by provider
When considering merchant cash advance lenders, make sure you understand what their application process really looks like. A lender that has a complicated application form coupled to a long wait while the application is processed isn’t going to help you get the cash injection you need in a useful time-frame. You want to make sure that you use a lender, such as Capify, which has gone to great lengths to simplify the application process as much as possible.
Step 2 - Your circumstances
With all of this in mind, it’s important to know how you stand in relation to your eligibility for a merchant cash advance. Do you know your business credit score? If the answer is no, it’s important that you find out before you apply. If you have a good credit score, there’s a considerably lower chance your application will be refused. A bad credit score isn’t necessarily a deal-breaker, but it’s something you’re going to need to address in your application – namely how you got that credit score, and what you’re doing to improve it.
You will also need a firm plan of action as to what you intend to do with the money. It’s no good just applying for a merchant cash advance for the sake of it. Your lender is going to ask you what your plans are for the money, and you intend for them to help you to develop your business. Where possible you should be able to show detailed costs, as well as some project forecasts for how your business is going to benefit as a result of that investment. Have this ready before you apply, it will make the application processing that much faster.
Step 3 - choose your lender
With all the homework and background done, it’s time to choose your lender and make your application. It helps to consider an experienced lender, such as Capify – an experienced lender, specialising in merchant cash advances for over ten years. As long as you meet the criteria, you could be pre-approved in minutes.
To qualify you’ll need to be trading for six months or more, with financial statements covering the whole of that time, and to be processing at least £5,000 per month in card transactions.
If you want a cash injection for your business that doesn’t come with a load of stress, strain, and strife, apply online with Capify today.
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