When a Merchant Cash Advance is the Right Financing Decision
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When a Merchant Cash Advance is the Right Financing Decision

Whether you are ready to expand your business, want to make improvements, or just want to take some personal cash out of your business, a merchant cash advance may be the right loan for you at the right time.

A merchant loan enables you to take a significant unsecured loan. Qualification is easy and with few restrictions. These loans can be approved and funded in days rather than months.

How Merchant Cash Advances Work

Merchant Cash Advances are repaid from your future cash flow. There is no set monthly payment. Instead, it is a percentage of your daily credit card sales. That means when business is good you pay the money back faster. When business is slow, the amount you pay back is less.

Essentially, the way a merchant cash advance works is the lender directly receives a small percentage of your credit card sales. This means you may have to change from your current merchant account provider to one the lender has set up to split each payment into your account and the lender’s account. If you do have a slow season of the year, the lender might take a close look to determine if your credit card sales are sufficient during the slow season to make a minimum payment. Those are often the only two requirements to qualifying for a merchant cash advance.

Ways Merchant Cash Advances are Used

Lenders don’t care how you use a cash advance. Maybe you’ve barely managed to survive the sour economy and are now ready to grow again. A cash advance can be used to restock inventory. It can be used to train new employees. It can be used to open another shop on the other side of town.

Others have equipment that is falling apart or a need to buy modern equipment. The loan doesn’t even need to be used in your business. If you want, you can use the funds to go on holiday.

Merchant Cash Advances Are Often Better Than Bank Loans

High Street Banks don’t make business loans for £3,000 or less. Many merchant cash advance providers will. They are much more flexible. The right business can qualify for a cash advance of £75,000 or more.

Additionally, many businesses take sequential merchant cash advances. As one loan is paid off, another is quickly approved. This can be a great way of growing your business. The first loan is used to add on to your shop. A sequential loan buys the needed equipment, and a third hires and trains new staff.

Be sure to shop around for your Merchant Cash Advances. Terms and conditions vary significantly. Some merchant cash advances are very expensive. Others demand the money be repaid very quickly, which takes a big chunk out of your cash flow. You want to go with one that understands taking to much or being to costly puts your business at risk. One that is balanced between making sure you retain enough cash flow to succeed and they take a smaller profit to encourage you to come back for repeat cash advances.