Businesses often need to take out loans from time to time in order to grow and stabilize. But most business owners don’t qualify for traditional bank loans. If you have bad credit or little to no collateral, you may not qualify for a loan in a bank. However, a merchant cash advance loan may be an option.
What Is A Merchant Cash Advance Loan?
A merchant cash advance loan is a way for merchants to access funds, even if they don’t have perfect credit. A merchant cash advance is an alternative to a traditional business loan. This alternative financing solution allows businesses to get the money they need without having to wait for the 60 to 180 days for a traditional bank loan or giving up ownership of property as collateral.
The lender provides your business with a lump sum of money based on its future credit card sales, and the loan is repaid over an agreed period of time, usually between 12 and 36 months. That time period can be as short as one month or as long as five years, and repayment is based on a percentage of each credit card sale.
Loans can range from $3,000 to $250,000; the amount that’s available will depend on factors such as how much your business makes, how much inventory you have, and how long you’ve owned the business.
Before You Apply for This Type of Loan…
Finding a merchant cash advance loan is a fast, easy, and easy way to get on the path of financial security. But, there are some things you should know about getting a cash advance loan before you take the plunge. Many business owners who accept credit card payments are curious about merchant cash advances. However, when it comes to cash advances, there is a lot of misinformation floating around. First of all, all cash advances are not the same. A merchant cash advance is not a loan like a traditional loan. When you receive a merchant cash advance, you essentially sell future credit card sales to a lender. The lender then advances you the money you will pay back when your debtor pays their credit card bill.
There’s nothing wrong with getting this type of loan; make sure that you get it from legit agencies to avoid future problems.