Merchant Loans: Get Cash Quick with the Greatest of Ease

By: Edwin Linares

We all know that securing a business loan is a tedious and time-consuming endeavor. With all the required documentation and credit investigations on top of the required overall collateral, one is not even guaranteed an approval. If it is quick-cash that your business is in desperate need for, merchant cash advance or loans may be the answer this assumes, of course, that your business accepts credit card transactions from your customers.

In merchant cash advance loans, a business can sell a portion of its credit card transactions to a third party called the 'provider'. This provider buys the future credit card sales at a discounted rate, thereby providing the business the cash advance for its operational needs.

The fixed discount rate that is applied for every future credit card transaction slowly pays for the loan. This continues until the cash advance is paid off.

Merchant cash advance is a short-term financing product. It does not present the same limitations as a standard business loan. In many ways, merchant loans, or better referred to as merchant cash advance, is not entirely a loan. It is an acquisition or purchase agreement. The provider purchases the claim on your credit card dealings and trades back those claims to you for a fee.

Needless to say, this type of financing is indeed expensive. Usually a 40% premium is taken of your total advance to cover the risk factors that the provider will be taking. Nevertheless, for businesses that really need cash immediately, this expense is deemed worth it.

You may wonder who would be interested in this type of arrangement. It is usually the individuals or business who does not qualify for the other conventional long-term loans. You see, the application for a merchant cash advance can be as quick and easy as a one-page application with basic documentation. Approval can be gained within one to two days and the cash can be made available within 7-10 days. Not bad, right?

Sometimes, cash advance providers will require some information on the purpose of the loan. Some only entertain requests that are geared towards expansion for business. However, there are other utilization for merchant cash advances such as, buying of new machinery, inventory or equipment, tax or debt payments, funding a marketing or advertising activity and, more popularly, taking advantage of a limited offer on property or asset purchase.

The attractiveness of merchant cash advances is generally credited to the simplicity of the approval process. Unlike many bank loans, qualifications for merchant cash advances are as follows:

-Must be an established business for at least 1 year
-Must have credit card transaction records for at least six months
-Must not have any previous histories of bankruptcies or liens
-Must have at east one year remaining in the commercial property lease
-Must not have any other existing cash advance agreements with other entities

Finally, keep in mind that a strong credit history is not a strict requirement, but it undeniably helps in gaining better deals with the merchant cash advance provider.

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