Business Cash Advance - The New Source Of Funding For Entrepreneurs

By Author: Daljeet Sidhu
Total Articles: 4762
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Businesses are always in need of a loan. Be it the working capital, purchase of equipment, buying inventory, renovations or perhaps an acquisition, a business will require money to finance the project. Bank loans are useful but tough to obtain. Small businesses especially have a tough time getting approved for bank loans because of the stringent requirements and extended timelines. The downturn has also spun a credit crisis that has worsened the situation further.

Some of the available small business loans are lines of credit, term loans, equipment leasing, unsecured or secured working capital loans, SBA loans, and franchise startup loans. All these loans involve detailed documentation including projection of past and future income, review of credit history, collateral, an effective management and a notable growth plan. Moreover, businesses may have to approach many lenders before they obtain a loan since the approval rates are not very bright.

There is an alternate loan choice that could be perfect for your business if you hate the time and the documentation it requires to get a conventional loan or if you just ...
... cannot wait for several weeks to get it approved. It is called merchant cash advance (MCA) or business cash advance. It is definitely a more attractive option for small businesses with immediate funding needs. Many private companies, banks, and credit card processing companies offer such financing. The interest rates are higher than bank loans, but the difference has shrunk in the past few years. The paperwork involved is pretty minimal, and credit score ... well, if it's good, great. If not then it will not ruin your odds of getting an advance though it may influence the amount of cash advance approved. The approval cycle is short - anywhere from a few hours to only 3 days! And the cash is available in your business's bank account in just a less than a week. That's just what makes MCA so popular - funds are available when needed the most.

The one prerequisite for the approval of an MCA application is a history of good credit card receipts during the past nine months (typically an average of $3000-$5000) and not less than nine to twelve months of having been in business. The merchant cash advance provider purchases a percentage of your future credit card sales receipts for the dollar amount advance to you. The payment deductions are handled by the credit card processor without any need of involvement of the business or the cash advance provider. This is good as the business owner does not have to keep track of payments or payment dates. Another good trait of an MCA is that the monthly payment fluctuates based on monthly credit card sales and is fixed as a percentage of the same. Cash advance recipient is relieved of the stress of meeting a predetermined monthly payment since it can fluctuate depending on monthly sales.

Since merchant cash advance is a purchase of future revenue, its providers are not regulated under financial loan laws. There is no limitation on the interest rate a cash advance provider can charge. It is a good idea to work only with reputed providers to avoid being ripped off. Examine the contract with care to make sure that there are no hidden costs or ambiguous terms and conditions.

The merchant cash advance industry is slowly maturing and many bigger players are making attempts to regulate it to some extent. As a result, MCA is fast becoming a mainstream source of finance for businesses of all sizes.
About Author:
Daljeet Sidhu. Read Merchant capital advice. Compare Merchant Cash Advance quotes. Join for lead generation.