Merchant Cash Advances are not loans. They are infusions of immediate cash to approved merchants for working capital. These infusions are sometimes conflated with loans because they involve specific payback amounts and timeframes. After pre-approval, the cash is issued to the merchant pursuant to a “Pre-Purchase agreement” between the business and the Merchant Cash Advance issuer. Many merchants receive same day cash advance which makes this method of business funding an excellent alternative to small business loans.
Since 2008, banks have reduced their lending to small businesses leading many to seek alternative business financing. Even BBB Accredited Businesses are being left under-financed. Fast cash advance gives businesses flexibility managing their debt profile. Immediate cash advance gives them capital that enables them to thrive and reach better heights in their respective ventures.
Are Merchant Cash Advance better than banks in other ways as well? Just from a cost of capital perspective cash advance rates appear high but, when compared to term loans for the same amount the actual cost is less. A good comparison is the difference between a 12 and 30 year mortgage; the monthly payment is much higher for the shorter term but the actual cost is less.
Merchant Cash Advance is an alternate means through which business owners can access immediate cash fund their ventures. Using a basic business loan calculator which estimates cost based on current prime rate for small business loans, merchants can know in an instant what rates the best cash advance apps are offering!
The process is simple and quick. The merchant completes a 1-page application and submits it along with their last 3 months of bank statements. An underwriter reviews the file and performs a credit check and risk evaluation. Once the file is approved an offer is made to purchase a specific amount of the merchant’s future sales.
If the offer is accepted by the merchant a contract is issued, signed and a last call (“the funding call”) is made between the underwriter and the merchant. Proceeds are transferred immediately to the merchant’s bank account sometimes actually during the call. The entire merchant business loans process is safe, fast-paced and unrestricted in many ways.
A few facts about Merchant Cash Advance and Same Day Cash Advance:
- The whole process can finish in just twenty-four hours.
- The loan repayment is hassle-free and business friendly.
- There is collateral required.
- Poor credit history is not an obstacle to approval for Merchant Cash Advance.
Debit card Cash Back programs like the type offered by Coinbase, Lendup offer good interest rate and offer an alternative to direct lending. The commercial loan application process itself is cumbersome however which is why many merchants opt for fast cash advance or alternative business financing.