Benefits of Small Business Financing by Merchant Cash Advance providers
Acquiring resources to start a small business is an uphill task. Every small company needs financial resources to meet its daily requirements, to expand their business, and for some other purposes. As per a study conducted recently, new firms fail during the initial years of their operation. One of the main reasons for this is a lack of funding.
There are many sources of small business financing, such as financial institutions, banks, angel investors, and venture capitalists but they all have some kind of drawbacks. Most importantly, these institutions judge the credibility of a business because of which it becomes hard for them to obtain a loan.
If your small company needs immediate financing, then you should approach the providers of Merchant Cash Advance or MCA. This option will be ready to provide you financial assistance even if you have a poor rating of credit. Moreover, the providers of MCA are ready to offer you financial assistance without any collateral. Before getting to know about the advantages of Merchant Cash Advance, you first need to know what an MCA is.
Merchant cash advance is a form of small business financing, which is not a loan rather a cash advance just like its name suggests. It enables the merchants who deal with the payments of credit cards to obtain financial assistance. The repayment of this cash advance is done through the future sales of the credit card. An MCA is a very convenient option for small enterprises as they have a very fast approval process and credits the amount of cash advance in the account of business owners within a period of 2 to 3 days.
Read More: How a Business Advance can Help get Your Business off the Ground
How does an MCA work?
Small firms enter into an agreement with the MCA companies and decide the amount of cash advance, the percentage of holding back, and the terms of repayment. Once they enter into the contract, the funds are transmitted to the bank account of the small organization in exchange for the receivables of the credit card.
Every month, a decided proportion of revenues are set aside by the small merchants to repay the amount to the Merchant Cash Advance providers. This procedure continues till the full amount is paid back to the providers of MCA. Getting an access to the account of a business merchant eliminates the need for collateral that is there in the case of conventional loans offered to small firms.
As the repayment procedure of this small business financing option is solely based on the balance amount in the account of a business merchant, the time period of repayment of this small business financing totally depends on the number of transactions performed by the business.
Benefits of Merchant Cash Advance
There are certain advantages that a company can get by obtaining small business financing from MCA providers. That means during the flourishing periods, the repayment will be made quickly whereas during the off seasons the payback is comparatively slower. Other than this, there are some other perks of attaining a Merchant Cash Advance, which is as follows:
1) No collateral security
If you are looking for a safe source of small business financing, then you should opt for Merchant Cash Advance. If your small company takes a commercial loan, then its credit rating can get affected. A merchant cash advance is a transaction of sales; therefore it does not create any negative impact on the report of credit. Proprietors who obtain a cash advance do not have to go through the trouble of losing collateral, which is a common situation of default in the case of commercial loans.
2) Easy procedure for collection and application
Applying for an MCA is an easy and quick process. All you have to do is fill an application form online. Plus, you are required to provide particular documentation and information related to your business, like the statements of credit card processing and the ID of business. The process gets completed very quickly and the company receives a response within a period of 48 hours.
It’s an easy and fast procedure for MCA application that helps small business owners to keep their focus on the daily routines of their business. The application procedure of obtaining small business financing through MCA is way better as compared to the time consuming and complex process of banks and financial institutions.
3) High chances of getting approved
MCA companies give more importance to the performance of an organization in comparison to its credit rating. This practical approach helps companies to get qualified for a cash advance. The advance provided by the MCA providers has an approval rate of 95%.
The cash advance that will be sanctioned to the small companies depends on the revenue received by them on a monthly basis during the previous year. Therefore, this source of small business financing is the best for small companies when it comes to the rate of approval.
4) Collections are based on revenue received
MCA companies only receive revenue if the merchants are getting paid. These are the words of a leading provider of MCA. This is one of the main advantages of acquiring finance from Merchant Cash Advance providers. This source of small business financing does not compel you to make fixed repayments on a monthly basis.
MCA companies only collect repayment when a business merchant generates revenue from its sales. The repayment made to the providers of MCA is based on a fixed percentage of the credit card sales of a small enterprise. MCA companies receive higher payments during the flourishing months and less repayment when the revenue generated by the merchant is less.
5) Easy cash access
As the paperwork required is very less in case of Merchant Cash Advances, the small firms can get easy access to small business financing. On the other hand, commercial loans take months to get processed and approved.
If you take an advance from MCA companies, then it will be provided to you within a few days from the date of approval. This instant source of financing can be one of the significant assets that a small enterprise requires.
6) No negative impact on credit
The best thing about small business financing from the merchant cash advance providers is that it does not create any negative impact on the credit of your business. This is major because merchants are not actually acquiring a loan rather they are just selling the future sales of the credit card against capital. Additionally, the providers of MCA don’t ask for a good credit score to get eligible. Therefore, you don’t have to worry about a poor credit score.
7) Not stressful
Being an owner of a business is a great thing but at the same time, there are a lot of responsibilities associated with it. It can lead to stressful situations, especially when you are in a need of finances. Merchant Cash Advance as a source of small business financing helps you to get rid of all these stressful situations. By getting rid of all these pressures, you will be able to concentrate on your business in a better manner and deliver your best.
You can also use this source of small business financing to expand your business. If you are running a small business or a newly incorporated firm, then that means you have very less physical resources. Irrespective of the growth and increasing number of orders, it is not possible for a firm to spend all its earnings in buying equipment and machinery.
Here comes the role of Merchant Cash Advance, which you can use to purchase new assets as well as equipment. All the machines that small companies use require maintenance on a daily basis. You can use Merchant Cash Advance to meet all your daily requirements. Plus, you can use it to expand your business.
9) High flexibility
Merchant Cash Advance offers a lot of flexibility to the small companies, which no bank or financial institution can offer. Finances can be easily procured if you take financial assistance from the providers of Merchant Cash Advance. There are no terms of fixed repayments whereas if you take loans from a bank, then you are required to repay a fixed amount of money every month.
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So, this is all about Merchant Cash Advance as a source of small business financing. If your small company is in an urgent need of money, then an MCA is the perfect choice for you. It has a number of advantages, such as easy cash access, no collateral, no negative impact on the credit, and high flexibility.
Most importantly, you can use an MCA for your business expansion and to buy more equipment for your business. This also helps business owners to get rid of all the stress that they get through in order to meet the daily financial needs of the business.
If you take financial assistance from the providers of Merchant Cash Advance, then your advance will get approved very quickly and easily. In order to take an MCA, the owners of small businesses are required to submit minimal documentation. Once, the documents get approved, the cash advance providers credit the amount of cash advance into the merchant’s account. So, if you are in need of small business financing, then MCA is the most appropriate choice for you.
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