Merchant Cash Advance: The basics on fast business loans

fast business loans

At unexpected times most businesses are faced with expenses that may pop up and when they do, the ability to get quick business loans from a trustworthy partner is crucial. In the recent years, most businesses have opted for fast business loans over bank loans. This increases popularity and preference for merchant cash advance, MCA loans among the small business. Banks, which were a popular form of traditional lenders, have lost the privileges they easily enjoyed with small businesses. Fast business loans are more flexible and reliable to businesses that have pressing needs.

To enable many loan offering companies to reach the various small businesses, there are a variety of loan options that a business would choose to use. The merchant cash advance (MCA) allows a business to sell only a small portion of the business to receive some lump of cash to meet the expenses. The entrepreneur act as the efficient link between the MCA funders and the clients. This section will enable you to have a broad understanding of what the fast business loans are about.

Read More: Working With the Right Merchant Lenders for Your Business Loans

An explanation of Merchant cash advances

MCAs are considered to be among the alternative lending options with others in the category being working capital loans, business lines of credit, short-term business loans, equipment financing and invoice financing. MCAs depend on the future sales and earnings depending on the agreed percentage risk between the entrepreneur and the lender on the total credit sales. Fast business loans invest in the future credit sales of a business.

Today, the merchant cash advice looks for a way to avoid the bank loans which hassle a business and instead increase a business fundings. Due to the loan payment which is paid entirely from the credit sales, the business needs to accept the credit or debit cards during a transaction. Despite the bad debt records of an entrepreneur, he/she is still eligible for the loans. The loans can be used to expand a business or replace an essential equipment that died unexpectedly. What both these scenarios have in common is that you will require fast business loans that will not require weeks to the bank and reams of paperwork.

Merchant cash advances have a high interest. Though they are considered not to be strict loans as they are given to businesses with the amount of revenue it can generate. This secures the payment plan for the loans. Though the cumulative interest is high, the repayment is spread over a period that is sustainable. The payment period between the clients will be arrived at after discussion and linking with the funding sources.

Criteria that the business needs to meet

For a business to be considered for a loan, a business needs to fulfill a couple of requirement:

  •    Accepting the use of debit or credit cards in their sales transactions.
  •    The business should be in a position of generating at least $10,000 monthly.
  •    The licensing and certifications of a business.
  •    The trade associations of the business.

Specific requirements are crucial as they help filter out the different clients with a shaky revenue base whose only source of security is the revenue generated on a regular basis by the business.

The application process

A simple reason as to why there is an increased popularity of merchant cash advance is due to their simplified application process. Unlike the tiresome traditional lenders who take small businesses through a difficult and long application, the fast business loans have elaborate and short processes where an entrepreneur only needs to provide these during the merchant cash advance application:

  •    A copy of their past credit sales.
  •    A financial statement of the business.
  •    A copy of the projected sales in the future.

After undergoing this simple process, the loan approval and processing takes a few hours or days. Some fast business loans are disbursed within a day. The requirements for the application of the MCAs are reasonable and attainable. The loans application does not ask for any form of collateral. Some applications processes have been generated online where any client can apply for fast business loans at any location provided they have an access to the internet.

Repayment of the MCAs

Clients that you link up with MCA providers will appreciate if you give them an overview of how you repay the loan. Unlike other traditional loans which may require a client to pay a fixed amount on a regular basis, MCAs are repaid depending on a business performance. This helps highlight the pretty sustainable repayment methods and how unique the method of payment the funders adopt.

Depending on the agreed fixed percentage that was agreed earlier between the MCA providers and clients, the method of payment would take between 2 months to 18 months. Though the payment plan may at times take more than a year, the provider of the MCA will not take any form of legal action against the entrepreneur.

A favorable return on investments is offered as compensation to the high cumulative interests that are paid on the fast business loans.

The role of entrepreneurs in MCA lending

The main role of an entrepreneur in MCA is building and bridging the gap between the business and the fast business loan.

The entrepreneur:

  •    Acts as a communication link. To avoid troubles in finding an MCA provider for a business and a potential client, the entrepreneur acts as the arbitrator between the business lenders and the business.
  •    Ensure party credibility. During a trade, an entrepreneur is able to identify an insincere party and ensure that both the funders and the business will not trick the other by assuring the credibility of the providers since he knows the character of the MCA provider.
  •    Undertake all transactions on behalf of parties. In some scenarios, the entrepreneurs are the ones who facilitate the transactions among the small businesses and the fast business loans. From such transactions, they get their decent amounts of commission.

Other roles of the entrepreneur other than stated above are playing an influential role in the economic growth and an improved standard of living of the country, wealth creation and sharing, offers employment to people and develop a community.

Reasons for small businesses to consider fast business loans

It will be convenient for a small business to consider seeking the financial aid from fast business loans due to a number of reasons.

Here they are:

The application process is simple. Fast business loans are characterized by the approval processes and short applications. The requirements are manageable as they are few unlike the case of traditional lenders which have tired many business clients.

High approval rates. With clients, it’s satisfying if they get a loan that they had applied for. Many clients have lost trust and disregarded the traditional lenders due to their low approval rates. A client should consider the responsive and reliable lenders such as the fast business loans.

No need for any form of collateral. Clients avoid the risk of losing their valuable possessions by applying for MCA loans offered by the fast business loans. The MCA loans are offered to small businesses without collateral and are considered as unsecured loans.

Business with bad credit history can apply for a loan. Provided a business can prove they can sustain the repayment mode; most MCA providers will offer as much cash as a business needs. Despite a bad history which many small companies may have, a business will still be considered eligible for the loan.

Preferable for emergencies. As most MCA loan applications take a few hours or days for approval and disbursement of the cash advances, small businesses can easily meet their urgent financial needs. This offers a quick solution to an unexpected inventory problem which would force a business to restock for a large order or a busier than expected sales cycle.

  Revenue-based collections. The fast business loans are repaid only after sales of the credit through a fixed amount which is paid monthly. The MCAs amount fluctuate based on the sales of a month whereby in flush times, the MCA receives a large monthly sum while in lean months the MCA scales its share proportionally.

 Quick access to cash. A faster turnaround is offered due to the low amount of paperwork needed to apply for a merchant cash advance. This would be a crucial to fast business loans which need immediate funding to seize an unexpected opportunity or pay off a creditor.

In conclusion

One can apply for a merchant cash advance today and get approved on the same day. The merchant cash advance has no collaterals, easy to renew and quite reliable to many small businesses. Fast business loans despite their high-cost rates provide large opportunities even to businesses struggling with bad debt. Most merchant cash advance funders offer prompt services that are as to why many small business owners are looking for an MCA funder that will meet their needs.

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