Businesses are often in need of a loan. Be it for purchase of equipment, working capital, inventory expansion, renovations or even an acquisition, a business will need the money to finance the project. Businesses avoid using cash flow for these ventures, as cash flow is their safeguard for rainy days.
Bank loans are useful but not easy to obtain. Small businesses in particular have a hard time being approved for bank loans. The recession has created an economic crunch that has worsened the situation further.
Some of the available small business loans are lines of credit, business cash advance, term loans, equipment leasing, secured or unsecured working capital loans, SBA loans, and franchise startup loans. All bank loans involve extensive documentation, projection of past and future income generation, credit history, collaterals and a convincing management and growth plan. In spite of doing all their homework, businesses may have to approach many financial institutions, as approval rates are not very promising.
Business cash advance is a much more attractive option for small businesses currently. Many private companies are offering business cash advance to small businesses. The interest rates are higher than bank loans, but that too is changing. The paperwork involved is pretty minimal, and credit score... well, if it's good, great. If it's not, it won't be a hindrance in getting the advance. The application is approved faster and with minimum fuss. The most important thing is the business gets the funds when it needs it the most.
The one prerequisite for the acceptance of your merchant cash advance application is a history of good credit card sales over past months and a minimum period you should have been in business. The merchant cash advance provider purchases a cut of your future credit card sale receipts for the advanced amount, which you get in 1-3 days from application approval.
As merchant cash advance is a purchase, its providers are not regulated under financial loan laws. It is advisable to work only with reputed providers to avoid being ripped off. The merchant cash advance industry is maturing and will soon become a mainstream finance source for businesses of all sizes.
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