subject: Merchant Cash Advance - A Simpler Way Of Funding Your Company [print this page] A merchant cash advance is an unsecured advance of working capital on receivables a business will realize in the future, commonly provided by independent financial institutions. Unlike the normal loan, the cash advance is secured with future credit card revenues and entails a great deal less paperwork than a traditional small business loan attained through the bank. Ideal for entrepreneurs that don't have several years of work history experience, a merchant account loan provides needed funds quickly.
Banks look at 5 characteristics when figuring out whether to provide a business loan. These characteristics, called "the 5 Cs," are as follows: character, capacity, collateral, capital and conditions. As normal loans are only given to those businesses with exceptional credit and a proven history, it is understandable that a lot of entrepreneurs simply do not make the grade.
The things necessary for a merchant cash advance are less stringent, and payment schedules are also more loose. Repayment is pegged ultimately to the credit card revenues realized on a daily basis. Still, the business owner should use a bit of patience when applying for this method of working capital.
Even though a reputable merchant loan company will extend the desired funding at a reasonable rate, some will attempt to charge ridiculous interest, demand up front fees and have unreasonable default terms. Reviewing the fine print is needed.
Even though many business advisers will suggest that locating cash from family and friends, credit cards and personal savings are better options, they aren't always realistic. In addition, it can take time to receive such cash, and it really is best not to do business with family and friends. Turn around time on this type of funding is most commonly under a week, and with no fixed payment amount, a merchant account loan is a excellent way to attain money immediately without involving additional people.
by: Daniel Samoohi.
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