Is a Merchant Cash Advance a Good Source of Business Funding?

A small business owner will definitely come to a point where they will require a high amount of capital for further growth. At such times, the merchant cash advance might seem like the best deal available. However, this is when one should consider whether the option of a merchant cash advance would be the best source of your business funding, or would it just cost you otherwise?

What Is a Merchant Cash Advance?

A merchant cash advance (MCA) is a type of business capital which is available for various enterprises. In simple terms, it is an amount of money given, in cash, to businesses in order to fulfill their capital needs. The repayment is done through broken up credit card transactions through your business. The repayment schedule varies as per the agreement, type of business, amount of interest, and other such factors. The merchant cash advance carries annual percentage rates which include the total cost of the loan.

What Makes the Merchant Cash Advance a Good Option?

Given that there are many other forms of business funding options available to cater for your capital needs, why would you want to opt for a merchant cash advance? This is where one puts forwards the pros and cons of each option and realizes that banking options are good but not the best. Here are some of the reasons that make the merchant cash advance a good pick:

Size Does Not Matter

The merchant cash advance does not consider the size of the business. Therefore, regardless of whether your business is large or small, you have the option to opt for this capital funding option. The main requirement is that your business has some form of credit card transactions which have some history and repetition method for repayment.

Therefore, the merchant cash advance becomes a good pick as it applies to both large and small businesses. This is a high amount of moral support and motivation for small businesses.

Rapid & Easy

As soon as you apply for a merchant cash advance, you will be credited with the cash. Therefore, there is no complicated procedure involved and the process does not make you go through troublesome and inconvenient documentation or paperwork. Online contact can be made with a request that is filed since this makes it easier to apply for a merchant cash advance.

Repayment Is Simple

As soon as you have obtained your funding, you do not have to worry as the repayment process is quite simple and straightforward. An agreement is reached as to the amount that will be paid back depending on your business’s credit card transactions that are done daily. The duration is also determined using the credit sales and is usually such that it is not difficult to repay back.

No Restrictions

One of the advantages of using a merchant cash advance is that there are barely any restrictions as to how the cash you are provided with can be spent. This means you can choose to use the cash within your business as per your own decision and requirements without having to worry about any restrictions. This makes it good for small businesses to move cash around and use it for smaller purposes such as covering payroll or buying goods.

No Need for Collateral

Any loan requires the business to give some form of security. However, the merchant cash advance does not require any form of collateral. All it needs is some form of credit card transactions. Therefore, the credit card transactions tend to act as a form of collateral. The basic requirement is for you to continue making sales and the money continues to be deducted from credit card transactions.

The merchant cash advance tends to be an optimal short-term solution for obtaining instant capital for various purposes in the business. As long as you have some form of credit card transactions within the business, you qualify for merchant cash advances which makes it easier for you to obtain capital in cash. The merchant cash advance supports small businesses, especially those who may not be given capital from banks or other loans due to various restrictions and complications.

Nowadays, obtaining capital becomes more and more difficult given all the complications that banks make you go through. The merchant cash advance works to overcome such notions and work toward supporting small and large businesses alike with capital. This makes the whole process easier and less inconvenient as compared to taking a loan from a bank. The complications involved are less and this automatically makes the merchant cash advance a great source of funding for your business.