Merchant loans are currently the best alternative for business capital funding over traditional financial institutions. This is especially true if you are a small business owner and you can provide the future debit and credit card sales as leverage. This type of financing is a smart option for businesses requiring immediate cash to cover their day-to-day expenses. The funding option also offers business owners an advance of even up to 100% of their average monthly plastic transactions or sales turnover.
Merchants and owners of businesses find merchant loans to be their best choice especially because of the requirements. The main requirement to qualify for a merchant loan is to exhibit a specified figure of debit and, or credit sales on an annual or monthly basis. The cash advance is designed in such a way that it can be customized to meet the capital needs of businesses that solely operate using debit and credit cards. This is unlike the traditional forms of finance such as bank loans, which concentrate on the payments that your business makes through checks. You, however, need to understand that merchant loan providers’ requirements differ depending on the lender, where some will even give the cash advance to businesses that do not have plastic transactions.
Uses of a Merchant Loan
If you are an owner of a small business that has no assets to put up for collateral and you need immediate capital, merchant cash is your best option. This does not, however, mean that only small businesses should apply for merchant loans. On the contrary, even big business owners find merchant funding very appealing.
One of the most appealing aspects of merchant loans is that the cash providers do not put up restrictions on how you should spend the money. Financial institutions like banks expressly state that the loan they give your business should be put to the use or uses stated in the application. Loan providers will let you spend the money your business needs as you see fit. Even if you had applied for the cash advance with the intention of increasing the inventory, you can use the money for payday without repercussions. You can use the cash to lease new equipment or even expand your business.
You will also be glad to realize that merchant loan providers will give you the needed capital irrespective of your personal or business credit score. This means that whether you have a good or bad credit score, you can always qualify for a merchant loan. This flexibility of merchant loans arises from the fact that they are loans in the actual meaning of the term. These are just cash advances issued and leveraged by your future credit sales. In fact, these loans will not affect your credit score however you spend them and however long you take to repay them back.
The repayment structure of merchant loans is another element of this form of financing that will make you choose them to raise business capital. The amount advanced by the lender is deducted in small portions from the credit sales you make on a daily or monthly basis. You also arrive at the proportion of the sales taken with your merchant loan provider.
The proportion also fluctuates with your sales since it is fixed. For instance, if you do not make sales for a certain period, you are not obliged to pay anything.
Considering all the above features of a merchant loan, then you can clearly see why this source of financing is the best for your business.