If you’re in the market for a merchant cash advance, there are a few things you should keep in mind before making an application. These include a fast approval process, a high factor rate, and the need for a good credit score.
Fast Approval Process
When applying for a merchant cash advance, speed is critical. When you have a cash flow shortfall, being able to receive a loan in a hurry can mean the difference between running your business or closing down. Unlike traditional loans, applying for a merchant cash advance is fast and simple. When you apply for a business cash advance, the lender looks at your business’s credit score and sales performance in determining how much money to approve. Generally, merchant cash advance companies have flexible requirements, so applicants with bad credit can still receive a loan. They also look at monthly bank activity, sales, and other factors to determine whether you have the financial stability to repay your advance. During the underwriting process, merchant cash advance providers will require you to submit your most recent three months of bank and credit card statements.
High Factor Rate
While a high factor rate when applying for a merchant cash advance may turn off some business owners, it may make good business sense for others. For instance, an established business with a proven track record may be willing to pay a higher rate for fast funding. This can be necessary for unexpected expenses or to take advantage of a profitable opportunity. To calculate the total cost of the advance, multiply the total advance amount by the factor rate. For example, if a business borrows $12,000, it will pay back $57,000 over 240 days. That is the equivalent of a 57% effective interest rate.
Need A High Credit Score
The good news is that you don’t need a perfect credit score to apply for a merchant cash advance. These loans are basically advanced on future sales. As such, they aren’t regulated as a bank loan is. However, if you have poor credit and are worried about obtaining one, choosing a soft credit pull merchant cash advance lender is a good idea. Although merchant cash advances aren’t considered loans, they report defaults to the credit bureaus, which can affect your ability to get more financing in the future. Therefore, you should carefully consider the pros and cons of obtaining one before you apply for one. However, if you have bad credit, don’t worry – there are ways to improve it quickly and easily.
Getting The Best Deal On A Merchant Cash Advance
There are several things to consider when applying for a merchant cash advance. You must be able to prove that you have a viable business, and you must be able to meet the eligibility requirements of the merchant cash advance provider. Many providers are willing to work with businesses with less-than-perfect credit as long as they can show a minimum amount of credit card sales. The application process is fairly simple and requires the business to provide information on its average monthly credit card sales. A merchant cash advance is a form of short-term financing. Instead of a bank loan, the lender advances cash against a business’s future sales. It is a form of financing for small businesses that need a little extra money to run their business. Unfortunately, not all small businesses can qualify for traditional bank loans, and a merchant cash advance is a great way to get the money you need.
Repaying The Advance
A merchant cash advance is a small loan that is paid back over time through your business’s sales. The repayment period varies but typically falls between three months and 18 months. You can choose to repay your loan in fixed amounts each week or choose a variable repayment schedule based on your monthly sales. When applying for a merchant cash advance, you must provide your business’ bank statements and credit card processing history to the lender. They will also want to see your minimum monthly sales numbers. If you have less-than-perfect credit, this method may not be right for your business.