A cash advance through merchant account works by letting business owner obtain funds through purchasing future credit card sales at a discounted amount. Repayment of the borrowed amount will then be made by deducting small pre-determined percentage from sales done via credit cards until the amount is fully paid off. This type of financial service program is not a loan but a working capital advance which is based on pre-purchased receivables in the form of Visa and MasterCard merchant receipts.
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A cash advance through merchant account may serve as a quick-fix to cover emergency expenses like unforeseen maintenance problems. But its benefits do not end there, as even healthy small businesses could avail of it to be used as a working capital for everyday business operations or in business expansion. This money source may small business loan be used in plenty of strategic actions like buying out old inventories of your competitor, opening new ventures, moving into a new location, putting up another branch, or just to be the first in acquiring a perceived feasible opportunity.
Looking for a company that provides this type of financial service is not a problem as there are many competing financial institutions out there no matter what country you reside in. And with the power of the Internet, you can now look for information on or apply for a cash advance through merchant account regardless of where you are.
With cash advance through merchant account, personal or business credit history is never a primary factor for getting an application approved. Though qualifications may vary from one lending company to another, two among the most common requirements is that your business accepts sales transactions via credit cards and that you must process a minimum figure of monthly credit card sales. The application process for cash advance through merchant account can take only several minutes of filling in form details which can be done online or right in the office of the lending company nearest you. If your application has been approved, you can have the cash in less than 5 days.
Cash advances has long since been offered by the banking industry and also comes in the term accounts receivable factoring, but it was just recently that merchants was given the chance to avail of this kind of funding. This program has uniquely integrated the advancements in technology to enable business owners to both acquire needed money as well as payback the lender in a timely fashion. Thus, cash advance through merchant accounts proves to be beneficial to both parties.
Marcel opened his dream candy store a little over a year ago. His store is the only one of its kind within miles, and everyone goes to his shop when they need to satisfy a sweet tooth. Since business is prospering, and Marcel has had some time to get his feet wet as a business owner, he is now ready to take on a new challenge; opening a new location in another city. All he needs now is a little more money to finance his latest business venture.
Marcel decided that applying for a merchant cash advance would be the most lucrative route for him and his business. But after conducting an online search for "merchant cash advances," he was astonished by the abundance of merchant cash advance lenders, and struggled in his decision of which company to work with.
As a business owner, you can probably relate to this story. Choosing a merchant cash advance lender can be a difficult process. In order to eliminate the confusion of this process, there are a few things that you should consider when choosing the merchant cash advance lender that is best for you.
Unnecessary Costs
Most lenders will not charge a slew of additional costs upon approval of a merchant cash advance. With some business transactions, closing costs are required. These are costs beyond the price of your item of purchase that are usually paid at the close of your transaction. Before choosing a merchant cash advance lender, make sure that there will be know closing costs in addition to the fee for the cash advance.
You also should not have to pay interest on a merchant cash advance. Unlike business loans, most merchant cash advance companies will not impose interest rates.
Monthly Credit Card Sales
The amount of credit card sales that your business processes each month can be one of the factors that determine which lender you can receive a merchant cash advance from. Before approving a loan, most lenders will require you to submit a certain amount of your business' most recent, consecutive credit card statements. This is to determine whether or not your business can support a merchant cash advance repayment. Usually, you will be required to provide three to six months of credit card statements, giving lenders an idea of your average monthly income.
You may be required to process anywhere from $1,500 to $5,000 in monthly credit card sales. If your company is seasonal and you are not sure if your monthly credit card sales will drop below the requirement during the off season, consider choosing a lender with a lower minimum monthly requirement, or a lender that requires submission of at least 12 months of credit card sales documentation.
How Long Have You Been In Business?
Some merchant cash advance lenders require that a person owns a particular business for at least one year before becoming eligible to receive a merchant cash advance. Others only require the lender to have been in business for 60 days. If you have been in business for over a year and process over $5,000 each month in credit card sales, you obviously have a wider range of options when it comes to choosing a merchant cash advance lender. However, if you have only been in business for a few months, and you need cash immediately, you will have to look for a lender that does not have a requirement of one-year business ownership.
How Quickly Do You Need the Money?
With any lender, the initial application for a merchant cash advance is not a very long process. And after receiving all of the necessary documentation, most lenders can approve your cash advance in a couple of days. But, the amount of documentation that is required to process and approve a merchant cash advance may vary.
Some lenders require only an application and documentation of monthly credit card sales. Other lenders require these in addition to bank statements, lease agreements, photo IDs, voided checks, etc. If you are in a hurry, try choosing a company that requires the least documentation, this may make for a speedier process. Making sure that you have all of your documents ready to go, can also expedite the process. In an ideal situation, you may be able to have your money within seven to 14 days of approval.
How Much Money Do You Need?
Most lending companies can fund up to $600,000 in a merchant cash advance. If you have multiple locations, there are also lenders that can fund you a specific amount of money per location. But the amount of money that you get really depends on the amount of credit card sales that your business processes every month. More or less, regardless of the merchant cash advance lender that you choose, the more money your business brings in, the more money you can get in your merchant cash advance. You can typically be funded 20 to 30 percent more than what your business makes every month.