Imagine having a source of business financing that isn’t directly tied to your commercial property or its assets as collateral. Thanks to merchant cash advances, businesses can enjoy an alternative that doesn’t put their assets at risk. Instead, MCA lenders are buying a portion of your future credit card sales. Here are some great ways that MCAs can be a boon to your business.
Collecting on Revenue
Perhaps one of the most attractive advantages of MCAs is that your payments to your financier are tied to how strong your revenue stream is. Traditional loans demand that you pay fixed amounts on a schedule. However, instead of a fixed sum to be paid per month, MCAs are derived by monthly percentages of credit card receipts. Should your revenue stream lag for any reason, the percentage you pay your lender will drop with it. Conversely, your MCA lender will get higher payments when you earn bigger profits. This arrangement will ensure your MCA financier won’t be a drain on your finances.
No Credit or Collateral
More traditional bank loans require collateral to back the financing. This can include your business and its assets, your car or even your home. Since merchant cash advances are unsecured, you can apply without endangering anything you own. This means the financier won’t be able to sell off your assets to pay off the loan. It also works well for businesses that simply don’t have the collateral to begin with. However, be aware of any personal guarantees that may be in your contract. If you’ve signed one, an MCA provider may still have recourse to recoup a defaulted loan.
Fast and High Approval
When you need cash quickly, MCAs are a good bet. Some loans may take weeks or even more than a month to be processed and approved. Not so with merchant cash advances. In many instances, you’ll have an MCA within one week or so, and without the need for lots of paperwork. MCA providers don’t need an extensive business history, usually nine months in operation. They’re focusing on your credit card receipts to determine if you can pay the loan, typically looking for a minimum of $5,000 per month. Because a provider is judging your business on your real performance, MCA approval rates are high.
Merchant cash advances are truly a debt free alternative to the usual world of financial loans. MCA financing is a much leaner process with fewer complications and less risky to businesses. Be sure to examine all potential MCA contracts and you’ll find one that’s a good fit for your enterprise.