Why Entrepreneurs are Opting for Merchant Cash Advances for their Small Business 

There are some definite advantages to using a merchant cash advance when capital is needed by a small business owner. First of all, many small businesses are not eligible for traditional bank loans because they haven’t been in business long enough to establish a solid credit history. It’s also possible that a small business may not have a very good credit history, and would be declined for a traditional bank loan on that basis. Even with little history or poor credit history, it is often still possible to secure a merchant cash advance to cover business expenses.

How a merchant cash advance works

Any business which has a significant portion of its overall sales transacted by credit card purchases might be eligible for a merchant cash advance. An alternative lender would review your business credit card sales, and if you are approved, an amount of money would be advanced to you on the basis of those sales. When the actual payments are made by customers, those payments are remitted to the factoring company which advanced the cash, minus the fee charged by the factoring company for the service.

Advantages of the merchant cash advance

As mentioned above, one of the big advantages of a merchant cash advance is that it’s fairly easy to qualify for one, and certainly easier than qualifying for a traditional bank loan. Once you are approved, the entire process can be concluded very quickly, usually in a matter of a few days. It won’t be necessary to provide any collateral other than the credit card sales themselves, so no business assets are jeopardized. Since no loan is being taken, there is never any amount to be repaid to a lender, and the funds which are received in a merchant cash advance can be used for any purpose deemed advisable by the business owner.

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