Often, Small businesses find themselves in a cash problem. There are very few options in such instances. One can try to borrow money from friends or relatives or (family money) but there is always a question mark. There is a loan from government financial institutions but they require a lot of documents and collateral securities to secure. There are other options for the immediate supply of cash without any or much collateral security.
Merchant cash advance is the best solution for small businesses like restaurants, hotels, professionals, retailers and even small manufacturers or start-ups. It is a straightforward deal and one is never beholden to friends or relatives. It is cash on demand, no questions asked. The process is relatively simple and there are minimum eligibility requirements making it the best source of funding for small business owners and startups. There are inherent pros and the cons are only a few. Consider the advantages of a merchant cash advance loan.
Fast processing and approval, fast disbursal
If cash is needed urgently there is no better source than this, not even a payday loan. One only need to apply online, submit a request and then the process is taken forward. It that simple! Applicants usually receive cash in their bank account within 4 working days of making the request provided every other requirement is met.
Minimum paperwork and no collateral security
Unlike banks and other lending institutions that ask for a lot of documentation and huge collateral securities, this method of funding is the easiest when it comes to paper works. One just needs to submit only the bank statement for the past six months, proof of ownership of business and proof of identity and residence. That's that.
Best for people with bad credit and low incomes
People with bad credit and low incomes can find themselves in a jam with no one willing to even consider their request for temporary funds to overcome their financial difficulties. If they go down this road, it is a reprieve and they can really get back on their feet easily. More importantly, their credit rating can improve with assistance from the right lenders.
Best for quick cash for business expansion and product launches
Traditional lenders everywhere may insist on a solid project report or current project status proof to show why borrower needs funds, how they will use it and how the funds will be recuperated. Small business owners rarely have the resources or wish to pay a chartered financial specialist in many cases to prepare such papers. Merchant lenders, on the other hand, help them get their hands on cash that will help them expand the business, modernize, buy equipment, give their retail store a makeover or launch periodic campaigns to rope in customers quickly.
No collateral Security
One of the finest and best advantages that borrowers like is that there is no need to submit any collateral or guarantee before they can get funds. Just their personal word is sufficient to help them get their hands on sorely needed cash for personal or business activities.
Easy repayments
MCA repayments are usually tied as a percentage of the daily credit card sales. One can just as well opt for a fixed monthly repayment. In the former case, the repayment amount is low if sales are slow and higher if the sales are high. In any case, repayment extends over one year and by that time the borrower may have used the money wisely to increase revenues.
The negative aspect
The only negative sides are that the factor rate which can be very high ranging from 1.2 to 1.5 that translates to the interest rate of 20% to 50% in some cases higher. But then, a non-secured loan is always expensive so you have to be careful in choosing it. Another factor is that the business should have been in existence for at least a year or so with a minimum turnover of $10000 in the United States. These are minor niggles if you will say.
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