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Merchant Cash Advance – Top Reasons It Is Preferable Over a Bank Loan

October 2, 2010 By

Is your business cash strapped? Is the economic recession slowing down your business? Is a low credit rating hampering you from giving your business the funds it needs? Are you tired of waiting for weeks to get a loan sanctioned? Are you praying for a way to get funds in a quick, straightforward and efficient way? If yes then merchant cash advance (MCA), also called a business cash advance, is the answer that will surprise you with its offerings.

Merchant cash advance is a blessing for small and mid-sized businesses, offering them a speedy and simple means of acquiring money for things like maintaining inventory, paying bills on time and for growing the business. With merchant cash advance, you trade credit sales for a lump sum of cash. MCA providers charge a predetermined proportion, typically around 8 percent of total credit card receipts in a month. If the recession induced poor credit scores or guarantee requirements are stopping you from getting approved for bank loans, then an MCA is most definitely a useful choice for you.

MCA offers various advantages some of which are discussed below.

1. No collateral at stake

Merchant cash advance is an amount paid in exchange of your sales receipts and not a loan. For this reason, a failure to pay up does not hurt your credit score unlike business loans that can create chaos in your credit report. You also do not face the chance of losing collateral, making MCA an extremely secure financing alternative for your business.

2. Straightforward application and disbursement process

Most MCA providers offer an online option to apply for it. The application does not involve entering tax returns, bank statements or business plan as accompanying credentials.

MCA providers base their decision on two factors – monthly credit card receipts and time in business – to appraise your financial fitness for receiving the advance and estimating the value. Typically, you should see monthly credit card sales amounting to at least $5000 and more than nine to twelve months in business to be eligible for funding.

3. Rapid turnaround

Merchant cash advance being a minimum paperwork deal promises short approval cycles. In fact, the funds will be usually transferred to your account within a week of submitting the request. This is a huge plus point over customary commercial loans that necessitate waiting periods of weeks or months, keeping you from paying your bills, buying inventory, paying your employees and maximizing on emerging opportunities.

4. High approval rate

MCA providers place more value on your current performance rather than credit score. Even if you haven’t got a very good past record you can still procure money without hassles. Your average credit card sales in the last few months will determine the approved MCA funding amount.

5. Revenue-based payments

Unlike traditional bank loans with unchanging monthly installments, MCA payments synchronize with your monthly credit card sales revenue. You an unchanging proportion of your monthly credit card receipts. When your business is flourishing you pay back larger amounts. When your business slackens, you automatically pay lower amounts. Thus, at no point does MCA repayments become a burdensome financial liability on your business, draining all its funds.

While these benefits are significant, MCA gives you much more. It gives you a competitive advantage by allowing you to take advantage of emerging opportunities without losing precious time. In business, losing time is losing money. If you keep waiting for a bank loan to get approved, you are doing injustice to your business. Opting for a merchant cash advance over a conventional loan can help you to pursue your business goals.

Daljeet Sidhu. Read business cash advance blog. Compare merchant cash advance quotes.

categories: loan,business loan,business financing,small business loan,cash advance,business funding,business cash advance,merchant cash advance,business cash loan,merchant advance,merchant loan,working capital,small business,franchising

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Business Cash Advance – The New Source of Financing for Business

September 30, 2010 By

Businesses are always in need of a loan. It could be for working capital, purchase of equipment, buying inventory, renovations or even an acquisition, a business will require cash to finance the project. Bank loans are useful but hard to obtain. Small businesses especially have a hard time qualifying for bank loans because of the strict requirements and lengthy timelines. The downturn has also spun a credit crisis that has aggravated the situation further.

Some of the available small business loans are lines of credit, term loans, equipment leasing, secured or unsecured working capital loans, franchise startup loans and SBA loans. All these loans involve considerable documentation including review of credit history, income projections, collateral, a good management and an impressive growth plan. Additionally, businesses may have to approach many loan companies before they obtain a loan since the approval rates are not very promising.

There is one other loan choice that could be appropriate for your business if you hate the time and the documentation it requires to obtain a conventional loan or if you simply cannot wait around for several weeks to get it approved. It is called merchant cash advance (MCA) or business cash advance. It is a much more attractive option for small businesses with immediate funding needs. Many private companies, banks, and credit card processing companies offer such financing. The interest rates are higher than bank loans, but the difference has shrunk in the past few years. The paperwork involved is pretty minimal, and credit score … well, if it’s good, great. If not then it will not hurt your chances of getting an advance though it may influence the amount of cash advance sanctioned. The approval cycle is quite short – from a few hours to merely 3 days! And best is that the cash is available in your business’s bank account in a few days to a week. That’s just what makes MCA so popular – funding is available when needed the most.

The one necessary requirement for the acceptance of an MCA application is a record of decent amount of credit card receipts during the past nine months (minimum average of $3000-$5000) and not less than one year of having been in business. The business cash advance provider purchases a percentage of your future credit card sales receipts for the advanced amount. The payment deductions are handled at the credit card processor’s end without any need of involvement of the business or the cash advance provider. This is good as the business owner does not have to keep track of payments or payment dates. Another good aspect of an MCA is that the monthly payment varies based on monthly credit card sales and is fixed as a percentage of the same. Business owner is relieved of the pressure of sending in a fixed monthly payment since it can vary based on monthly sales.

Financial loan laws do not regulate merchant cash advance lending since it is not a loan but a purchase of future revenue. There is no limitation on the interest rate a cash advance provider can charge. It is advisable to work only with providers of repute to avoid being ripped off. Examine the contract carefully to make certain that there are no hidden costs or confusing terms and conditions.

The merchant cash advance industry is gradually maturing and many bigger players are making an effort to regulate it to some extent. As a result, MCA is fast becoming a mainstream source of funding for businesses of all sizes.

Daljeet Sidhu is at TradeSeam. Read Merchant capital advice. Join for lead generation.

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Greatest Benefit of Business Cash Advance – No Collateral Is Expected

September 22, 2010 By

Are you apprehensive that the worldwide credit crisis will leave your business with insufficient funds? Is a poor credit score holding you back from getting a business loan? Are you afraid of losing your home and personal assets if you get a bank loan? Would you be keen on a funding option that is not only quick and painless but also unsecured? If yes, then business cash advance or merchant cash advance is ideal for your business.

Risks in staking personal assets for a business loan

Although home equity loans offer low interest rates, long repayment schedules and tax deductible interest reduces their practicality for small businesses. If your business plans start to turn a loss, your home may be foreclosed.

Similarly, when you offer vehicles as collateral, you give your loan provider possession of vehicle’s title. In case you fail to make your loan installments and your loan defaults, lender has the right to claim your vehicle. Taking on a secured loan is fraught with risk in these economically turbulent times. With business cash advance, you can sidestep this risk altogether.

How can business cash advance providers lend without pledging collateral?

Pledging a guarantee has been an indispensable part of the business of loaning money since its early origin. They are a lender’s defense against a borrower’s unwillingness or inability to repay loans. How then can business cash advance providers not need the security of a collateral?

Let’s go into what makes business cash advance funding successful without a collateral. First, in the interconnected and easy-access internet age, it is straightforward for providers to tell apart real borrowers and creditworthy businesses from those not so successful. To evaluate your eligibility, lenders check your credit card sales volumes, which can be easily obtained and validated. The second reason is that repayment is out of your hands after you sign the agreement. Since installments are deducted automatically at the credit card processor’s end, lenders are pretty much covered.

Great thing about this type of loan is that the providers only charge a percentage that allows you to comfortably maintain regular operations. As part of the agreement, a predefined percentage of your monthly credit card sales volume is paid out to the provider. This works well as your payment amount is reduced when sales are not going so well and do not turn into an needless burden.

Matching financing solutions to business situations

While a home equity loan works out in certain scenarios, business advance is ideal when you are looking for low-risk, fast and hassle-free financing. Tougher loan approval cycles post the recession and zero collateral makes these loans perfect for suffering small and medium-sized businesses. There is no point in relying on slow and unsafe banks loans when superior alternatives are on hand. Business advance is the newest advancement in business lending. Remember, no collateral is a good thing in funding and business cash advance is a top option in the current economic crisis.

Daljeet Sidhu. Business Cash Advance blog. Merchant cash advance advice.

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Business Financing – Three Easy Steps to Get a Business Cash Advance Approved

July 21, 2010 By

Are you missing out on business growth due to low funding? Are you tired of waiting for days on end to get your business loan sanctioned? Is your banker asking for an array of unnecessary financial documents? Do the countless inconvenient questions get on your nerves? Are you looking for a speedy and painless way to secure resources for your business and gain an advantage over the competition? If yes, then a business cash advance, also called a merchant cash advance is the ideal solution to your problems.

Business cash advance is a financing alternative that is changing the world of business. While a conventional loan application is approved in weeks or months, business cash advance is obtained within a week, sometimes in less than three days. The application is available on the internet. The form is quite simple and doesn’t take much time to complete. Further, you only need to submit a minimum set of documents for approval.

The cycle of business cash advance application is described below:

1. Setting up an account with an approved credit card processor

Business cash advance is not a loan, rather an advance purchase of your business’ future credit card sales. Thus, to receive a business cash advance financing, you should have an account with a major credit card processors. Open an account with the approved credit card processor and start processing credit card payments at least six months before applying for a business advance.

2. Submitting an application for an advance

Business cash advance providers need you to submit only your credit card processing statements with the application. Your application is qualified based on two criteria – longevity of business and average monthly credit card sales volume. Typically, you should have been in business for a minimum of 6 to 9 months with average monthly credit card sales of $5000 or more to qualify for a business cash advance.

3. Finalizing the business cash advance

If you are approved for the business cash advance, the provider will send you a contract. This will lay out four critical pieces of information.

- Future credit card receipts amount: This specifies the volume of the credit card receipts that you sell to the provider in exchange for the cash advance. It also gives you the actual cost of the advance.

- Cash advance amount: This specifies the total loan amount you will receive from the provider.

- Percentage of daily credit card sales: This gives the percent of credit card sales that will be paid out to the provider each day. This percentage should be fixed at the start and not change through the payment period. Watch out for vague clauses that can be used by unprincipled providers to hike up this percentage at a later stage.

- Penalty terms: The terms are specified to make you aware of possible actions in case of contingencies.

Upon receiving the contract, read it thoroughly. Clarify all concerns and understand every term and condition specified in the agreement. Remember that business cash advance is not a loan. Your contract is the only legal protection against unscrupulous providers. Once you sign on the dotted line, the advance will be transferred to your account within a week or less. Business cash advance is a quick and painless funding option. Simplify business cash advance funding by learning about the prerequisites for approval.

Daljeet Sidhu. Read Business Financing, Merchant Advance blog.

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