Most small business owners are aware
of merchant loans but do they really understand how they work?
First off; a merchant loan isnt
really a loan at all. The only similarities between a merchant loan and a
business loan are that youre given a large sum of money that you are expected
to pay back over an extended period of time.
A merchant loan is really
another word for a merchant cash advance.
Rather than loaning your business
money that you are expected to pay back each month with interest; a merchant
loan provider purchases a portion of your future, unprocessed credit card sales
at a discounted rate. Before they give you the money; they need to configure
your credit card processor to take a percentage of your daily credit card sales
each day to pay back the cash advance.
This distinction is important in a
number of ways;
Because they use your credit card
sales as a basis for the cash advance; your credit history is not the
predominant determining factor.
Because they use a percentage of
your credit card sales to pay back the advance; your payback amount fluctuates
with your daily sales. This flexible payback schedule helps take the strain off
paying back the advance.
Because they rely on your proven
credit card sales history; collateral is not required.
A merchant loan is more expensive
than a regular bank loan.
It is true that a merchant cash
advance is more expensive than a bank loan. One of the reasons for this is the
added risks involved with unsecured loans.
There are also many advantages to
merchant loans over bank loans. Some of these advantages include;
Quick approval: Businesses are usually approved within 24 hours.
Funding in 7 days: A credit card advance provider will deposit cash into your
business account in 7-10 business days.
Use the funds any way you like: Unlike most bank loans; We do not restriction how you use
your credit card advance.
There has never been a more
convenient way to get a steady flow of working capital for your business. Use
the following link if you would like to learn more about how a merchant loan can work for you.
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