When your small business is between a rock and a hard place, you may find yourself desperate to try anything in order to free up your capital. Unfortunately, many “underdog” entrepreneurs who are in search of quick business loans end up falling into the trap of rigid terms and hidden fees. Now, with more problems than they started with, these business owners will struggle to grow and thrive. But what if there was another way for you to increase your company’s cash flow so that you can take things to the next level? Merchant loan alternatives are one of smartest ways to quickly get the money you need, without setting yourself up for failure down the road. Here’s a look at what merchant cash advances are, and three key things that you should look for when considering financing.
Merchant Cash Advances At a Glance
Far superior to quick business loans, a merchant cash advance offers a more innovative means for smaller companies to obtain the working capital that they need to operate and move up the ladder. This type of advance is not actually a loan. Instead, entrepreneurs agree to sell a portion of their future credit card sales to the merchant advance company. In lieu of fixed payments, businesses pay back a small percentage of its credit card sales when batches are processed. Payments entirely depend upon the business’s volume of sales during that particular batch.
3 Things to Look for in Merchant Cash Advances
- 1. Fast approval and funding – Business owners who need help are looking for quick business loans – quick being the operative word. As such, it’s important to find a business cash advance company who won’t make you jump through hurdles in order to get the funds that you require. An application that’s short, simple, and to-the-point is ideal. You should also verify that the financing company is able to provide funding for you within a seven day period. This company should be the direct source of your business’ capital, rather than a middle man. This ensures a speedier turnaround on money.
- 2. Flexibility – When opening a business, many entrepreneurs find that their credit takes a hit. Although many lenders will take advantage of the opportunity to hike up your interest rates, a reputable merchant cash advance company will be understanding of your needs, and won’t penalize you for a lower credit score. Your score should also not impact your payment schedule. With business cash advances, the payback schedule should be entirely based upon your business’s credit card sales volume – not a fixed amount or set schedule. Lastly, your financing company should be flexible in terms of offering you more capital in your moment of need. As your business grows, you should have the ability to draw from a ‘line of credit’, so long as your business is operating smoothly.
- 3. Honest and transparent terms – When dealing with business loans, you may find that contracts seem a bit unclear or hazy. Too many entrepreneurs find themselves stuck with a loan with hidden fees and conditions that cause more harm than good to their businesses. Your merchant cash advance should be clear cut and transparent in terms of what is being offered, and how the money will be repaid. No extra or hidden fees should ever be tacked on to the advance. In this way, you’ll be able to use the funding to your full advantage and truly grow.
There’s no need to fall into the traps of quick business loans. With merchant cash advances, you can get fast, honest, flexible funding without the hassle.