Merchant cash advance loans provide a fast, easy way to obtain working capital financing that fits within your business’s sales cycle. By structuring repayment based on a percentage of future credit or debit card sales, the best merchant cash advance companies help businesses come up with the funds they need to expand or capitalize on a new opportunity.
Merchant cash advance financing works differently than a traditional business loan and comes with its own unique benefits. In most cases, a merchant cash advance provides a lump sum of cash upfront in exchange for a percentage of future revenue or sales. Additionally, having a poor credit score will not be a major issue when qualifying for this type of financing. The loan terms for a merchant cash advance traditionally work in two different ways:
For businesses with a high volume of credit or debit card sales, cash advance companies can extend a lump sum loan that is repaid daily from a percentage of each credit or debit card transaction.
The lump sum and repayment can be based on the business’s average monthly income. Borrowers will have repayments debited automatically each day from their bank account.
In either scenario, this specific type of loan allows convenient access to funds with a repayment plan that’s easy to plan around. For example, healthcare businesses that receive credit card copayments from their patients during office visits are in a good position to benefit from these types of loans. Auto repair and body shops are other types of businesses that can secure a business loan from customers who pay with credit card transactions.
1. When repayment is collected at a fixed rate, it’s much easier to track progress and get the loan repaid in no time.
2. Since repayment is tied to sales or revenue, it’s still manageable even outside of peak sales season.
3. You’ll get funds quickly, pay them off fast and put the cash to use without being burdened by long-term debt.
Unlike most other business loan types, cash advance loan payments are not based on a fixed interest rate. Instead, they rely on a factoring rate tied to your business’s monthly revenue or credit card sales. Still, the total amount you end up paying is related to the factor rate, the total value of the loan and the length of the repayment period, just like a typical term loan.
Cash advance loans are just one of the many financing options available to small business owners who need cash quickly. Talk to QuickBridge to learn more about cash advance rates, and find the best business loan for your specific terms and needs.