Merchant Loans: The Alternative To Traditional Business Loans
There comes a moment in every CEOs life when crucial choices must be made with regards to their business's future
. Sometimes, those decisions require some serious capital, and if you are relying on the traditional bank, then you will most likely wind up with nothing. For those moments, merchant loans or alternative bank loans may be the best option to increase cash flow.Merchant loans are easy to qualify for and give a lot of flexibility. Dissimilar to traditional business loans you will not be required to have superb credit or 2 years in business. If you have those items, wonderful, however they aren't required in order to qualify. All you will need is four months of merchant services statements and a one page application. The turnaround time on approvals are as short as 24hours and you can have the money within 7 days. If that is not alluring enough, the flexibility in paying it back illustrates even more benefits. Conventional bank loans require a set payment each month. They are not concerned as to how that payment will deteriorate your cash flow or capability to meet weekly obligations; they are only concerned with getting their money.
How Merchant loans are Set
While factoring is a growing industry and is definitely here to stay, many companies are not familiar with the procedure. Once you have created a merchant account and have a dependable account of credit card sales, you, as a merchant, can sell a portion of your expected income for a discount to the company who provides these alternatives to business loans, in return for a lump sum paid out more or less instantly.
Best of all there is no personal guarantee with these agreements. Should you close your doors, you are not responsible for the remaining payments. What makes the finance company providing the merchant account loan so positive; they have been using this type of financing for more than ten years. They believe that this model works. Cash infusions paid back within a short time without the hurdles. By the time you complete a bank loan, you will have paid more than twice for the working capital. Merchant loans will never be that expensive. All merchants should look at the cost of funds and conclude if it makes sense for their company. If you can increase business or make it through a slow time, then it it does.
An extra key factor of this arrangement becomes noticeable after you understand the payback terms. Your payments will be adjusted to reflect your monthly credit card transactions. Some months you will give back more, others less, but it will always be a small, fixed percentage of what you received.
How and when you use the funds is your choice
Conventional bank loans will require you to decide, in advance, exactly how you will spend the funds you are loaned. By speaking with a factoring broker, you pick what the smartest use of the money you borrow is. Whether it is growth, debt reduction, or repairs - it's all your choice. When you think about it, you have a consistent record of success with your establishment up to today, why wouldn't you understand how best to put the money to use.
Before you find yourself wanting money for your company, consider establishing a relationship with a merchant loan broker. Find out what options can be obtained for financing important plans and how to be approved. This way, when the time does come and you need to move ahead, you will understand what you need.
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