Merchant cash advances are a convenient and accessible option for SMEs because the way they are designed can make them easier to manage. As the unsecured finance is repaid via card payments, it can also be a more affordable and adaptable option.
Business borrowers don’t have to navigate fixed monthly payments as they would with a traditional business loan. Every time a customer uses the card machine, a percentage is automatically transferred to the lender.
As such, the more money the business earns through card payments, the quicker it pays off the cash advance. Of course, it works the other way around too.
One of the first things to consider is how much you want to borrow for your business. This depends on what you plan to use the money for.
For instance, if you need to buy some equipment or a specific product or service you can make a fairly accurate estimation. However, if you’re planning to use it for a renovation or business growth you may need to do a little more planning.
The lender will take your average monthly turnover into consideration to work out how much you’ll be able to repay comfortably. There are a few options out there and each provider offers something different. For instance, repayment lengths can vary, as can interest rates and TCs. Funding Options can help you search the market to find an option that aligns with your needs and circumstances.
Why choose Funding Options for a merchant cash advance?
Funding Options works with 100+ lenders and our award-winning smart technology searches the market to find the right funding options for flip through this site your situation. It takes minutes, there’s no obligation and it’s easy to use. To get an instant comparison, you just need to tell us how much you need to borrow, what it’s for and also provide some basic information about your business.
How do merchant cash advances work?
Merchant cash advances work by the lender ‘advancing’ you the capital amount that you want to borrow and are eligible for. A percentage (typically around 10%) is taken from your card payments to go towards the merchant cash advance repayment. In other words, 10% will automatically go to the lender, while your business keeps the remaining 90%. The lender will usually provide you with access to an online platform where you can see how much you’ve paid back.
At the end of the day, businesses can have good and bad months due to seasonal peaks and dips, the state of the economy and other things that might be out of the individual’s control. With merchant cash advances, the amount you pay back coincides with what you earn, which goes some way to relieving the financial pressure on your business.
What are the benefits of a merchant cash advance?
More flexible – Your business only pays back the loan when it takes customer card payments, meaning that repayments correspond with your sales.
Quick to access – Depending on the lender and application process, you can get approved for a merchant cash advance within just 24 hours.
No need for security – Merchant cash advances are a type of unsecured business finance, meaning you don’t need to secure it with collateral. This is a perk if you don’t have many assets.
Easier application process – When applying for a conventional loan, traditional lenders may require a business plan, however merchant cash advance lenders don’t.
Instead, they look at your merchant statements to get an insight into your business’ sales records. What’s more, the lender may be able to access your merchant account statements online, which saves you having to submit them via email or post.