by Nike Penmedia • 2020-03-17
Every business needs decent cash flow to thrive amid competition. Whether you are starting a new business or trying to scale an existing one, having access to working capital is critical. While conventional bank loan remains a staple in business financing, small and medium scale businesses are finding value in merchant cash advance financing, also known as MCA. Small and medium scale companies get merchant cash advance financing from merchant cash advance companies.
Merchant cash advance finance companies are financial service providers that offer business funding for with very flexible payment terms. The procedure of getting funds from merchant cash advance companies is not complicated. Businesses can use the cash advance to pay for operational expenses and scale their business. Businesses make repayments to merchant cash advance companies through a percentage of daily sales. This amount can range from 8%-13% of daily sales.
In a scenario where you are not financing credit card sales, the merchant cash advance company would need an alternative means of receiving repayments. Many resorts to deducting funds from your bank account through an ACH System. The deduction can either be daily or every week.
Merchant cash advance companies take some factors into consideration to determine the maximum merchant cash advance financing they can offer a business. One of the most critical factors they consider is the history of credit card receipt. Once merchant cash advance companies confirm the business is capable of making repayments, they will approve the loan without hassles. So, merchant cash advance companies are great for new companies without credit history and the ones with unimpressive credit ratings.
Let us analyze the factors that make merchant cash advance companies a viable funding source for small and medium scale businesses.
Perhaps, this is the most crucial benefit of merchant cash advance financing for small businesses. There is no need to wait endlessly before getting approvals. In some scenarios, merchant cash advance companies would approve a loan within a few days of applying for business funding.
If you do not fancy messing around with paperwork before receiving business funding, you would love merchant cash advance companies. Most of these funding companies do not even ask you to fill any paper, all the application procedure is online. In some scenario, you may be required to fill the merchant cash advance financing form and submit it via email or fax.
You do not have to bother about gathering funds to make your monthly repayments because merchant cash advance companies deduct repayments directly from your account. This approach allows you to manage the cash advance excellently, irrespective of your level of financial discipline.
Merchant cash advance companies is a viable alternative for businesses that cannot access traditional loan from banks and other funding sources. Companies that offer MCA do not need to analyze credit score to approve cash advances for your business. That is why the approval rate is high. So, you have a high chance of securing business funding with merchant cash advance companies.
While you are expected to present collateral to qualify for a traditional bank loan, merchant cash advance companies require nothing as such. All you need is to prove that you have strong sales and your cash advance will be approved without any hassles.
Now that you know the benefits that merchant cash advance financing offers your business, you would like to start researching the best options. Simply do a quick search on the internet, you will find hordes of merchant cash advance companies. In such a scenario, selecting the best one can be overwhelming. However, you can follow the guideline below to streamline the best company for your merchant cash advance funding needs.
Have you gathered a list of potential merchant cash advance companies from your research? Then its time to start screening.
Search for User Reviews: The first step in your screening procedure is to search for user reviews. What are other people saying about the merchant cash advance company? The opinion of other users will give you a fair idea regarding the quality of service you should expect. Bear in mind that not all reviews are genuine, so take your time to search for reviews from multiple sources.
Compare Rates: The interest rate that merchant cash advance companies offer businesses varies significantly. So, it will be best to search around to ensure you are getting the best deal. The terms of payment are another important factor you should check. Working with a company with flexible terms such as making allowance for increase and consolidation is highly recommended.
Call the Company: It is a great idea to get on the phone and talk with the merchant cash advance company. Even if you do not have any questions, your conversation with the company representative gives you an idea of their level of professionalism. Is the person on the other end courteous, helpful, and knowledgeable? These facts will help you keep the company in your list or strike it out altogether.
Read the Fine Lines of the Contract: You are bound to abide with the terms after signing the merchant cash advance financing contract. That is why it is advisable to read through the fine lines of the contract before signing it. Make sure you get clarifications regarding the terms that are spurious. Look out for sneaky hidden fees that can become an issue in the future.
Check for Reputation: Finally, you should check the reputation of the merchant cash advance company. The ones that offer top-notch services are usually members of professional associations. Also, check the years of experience of the company. It is preferable to deal with a company that has been existing for a more extended period.