Can You Finance Your Payroll Using Payroll Loans From Merchant Cash Advance

Sometimes it becomes necessary to consider securing payroll loans if your business needs additional working capital so that you can ensure that the payroll cycle is adequately funded. In such instances, MCA might be your only ideal alternative, hence you need to know all about how this form of financing comes in handy.

What are Payroll Loans?

This kind of loan is basically a short-term loan contrived to cater to specific business needs. The main reason of these loans is to ensure that your business has enough cash to cover costs of the employee’s payroll cycle. Since these loans are meant to be used for particular purposes, they are highly regulated by authorities and charge relatively higher percentage rates and require that the business will be able to repay quickly.

Due to the restriction associated with the traditional forms of financing for payroll loans, for instance by the banks, MCAs provide a much better alternative. MCAs are used for various expenses that relate to your business including but not limited to cost management, daily business operations, and in purchasing business assets. You can, therefore, choose to finance your loans through merchant cash advances.

Why Use MCAs for Your Payroll Loans

These loans are repaid within a short period of time, often on a particular date in the next payroll cycle of your business. As a result, payments depend on the payroll frequency of your organization. The short period also means that loans from sources other than MCAs are inflexible, charge high interests rates, and might even be rejected due to your credit record.

Using MCAs, however, means that you can choose to use the advance as a payroll loan without reason for concern. This is because repayment of these loans under MCA is not subject to your reason for borrowing.

Here some other main reasons why you should opt for MCAs when looking for these kind of loans for your business:

  1.    Credit history– Unlike the other sources of loans, MCAs don’t require you to present a perfect credit record to be eligible. All you need is to have a strong debit and credit card transactions.
  2.    Security– You do not need to put up collateral for payroll loans secured from MCAs, therefore, the probability of your enterprise being foreclosed is minimal.
  3.    Repayments– The repayments you make are automatically determined from your debit and credit card transactions every day. The repayments are therefore flexible irrespective of whether you used the advance as a loan or for other business purposes.
  4.    Maturity date– Unlike loans advanced by banks other financial institutions, MCAs do not need to be paid within a particular timeframe. Repayment here is exclusively based on the number of daily debit and credit card transactions. This means that how fast you repay the loan will be determined by the volume of plastic transactions you make.

The factor that most business owners consider while looking for payroll loans is whether they will be able to make the repayments fast enough. Merchant cash advances ensure that you can meet your payroll obligations easily, fast, and without worrying about losing your business to creditors.

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