Merchant Cash Advance 101

Many of you have probably heard about merchant cash advance but are not really aware of what they really are. This guide will teach you a basic knowledge on how to get this type of loan, and whether this is the suitable loan for you and your business.

The mechanics of the merchant cash advance is pretty simple. The providers advance your cash 1 to 3 times your monthly credit card sales. For example, if you make an average of $10,000 a month in card sales, the providers will willingly advance you $10,000 to $30,000. The amount depends on your gross sales as well as the type of industry you’re in.

The merchant cash advance is a business loan alternative almost every business can get! What are the qualifications to get a merchant loan? Companies will base the advance on your gross sales history rather than your credit history. Luckily, the merchant loan does not require good credit or collateral. This makes it easy for many businesses, even small businesses, to apply. Just make damn sure that you do not have a tax lien or in the brink of bankruptcy or foreclosure. Plus, if you can turn out more than $2,500 in credit card sales a month, you could qualify for a merchant cash advance.

Many people prefer the merchant cash advance because it is easy and fast for it follows the natural flow of your business. When your business slows down, you get to pay back less and vice versa. The easiest part about having a merchant cash loan is the paying part. Before the loan providers give you the cash, your credit card processor is set up to automatically use a small portion of your credit card sales to repay them. There are no more delayed or late fees, checks to write, and other stressful processes for payment.

So how do you apply? The providers will give you a simple two page application form, where you can fill out the required information such as lease or mortgage info, merchant statement history, in business for 4 to 6 months, and verification that you are the majority owner of the business.

Once you’ve opened your account with an approved credit card processor, you can now request for an advance. Once approved, your provider will give you a contract on the amount and percentage of credit card sales your loan provider will get as payment. Read the contract carefully, sentence per sentence, line per line, to avoid any surprises and misunderstandings later on. Cash is then ready to be released to the business owner once everything is signed and approved.

If you are on the look out for a great financing option for your business, opt for the merchant loan. This is a good type of loan, but it really just matters on the situation of your business. Merchant cash loans are however an exceptionally useful option especially when you are in need of emergency funds and not stake your personal assets.

Return to Home Page