5 Reasons A Merchant Cash Advance Is Better Than A Bank Loan
When small business owners need funding, they often turn to banks for loans. However, these loans can be difficult to obtain and come with a lot of restrictions. This is where a merchant cash advance comes in. A merchant cash advance is a type of financing where a lender provides a lump sum of cash in exchange for a percentage of the business’s future sales.
Here are five reasons why a merchant cash advance is a better option for small business owners than a bank loan:
1. No collateral is required.
One of the biggest advantages of a merchant cash advance is that it doesn’t require collateral. This means that small business owners don’t have to put up any assets as security for the loan. In contrast, banks often require collateral in the form of property or equipment. This can be a major barrier to obtaining a loan for small business owners.
2. The approval process is much faster.
A merchant cash advance has a faster approval process than a bank loan. Banks can take weeks or even months to approve a loan application, whereas a merchant cash advance can be approved in as little as 24 hours. This is because merchant cash advance lenders are primarily concerned with the business’ sales history and future revenue projections, rather than the owner’s personal credit score or collateral.
3. There are flexible repayment terms.
Merchant cash advances also offer more flexible repayment terms than bank loans. Instead of a fixed monthly payment, the lender takes a percentage of the business’ daily or weekly sales until the advance is paid off. This means that the repayment amount varies based on the business’ sales volume, which can be helpful for businesses with fluctuating sales. If sales are slow, the repayment amount will be lower. This can ease the financial burden on the business.
4. It is much easier to qualify for a merchant cash advance.
Banks often have strict requirements for loan eligibility, such as a minimum credit score, a certain amount of time in business and a certain level of revenue. In contrast, merchant cash advance lenders are more concerned with the business’ sales history and future revenue projections. This means that even businesses with poor credit scores or short histories can qualify for a merchant cash advance.
5. You can do whatever you like with the money.
A merchant cash advance offers unrestricted use of funds. Small business owners can use the funds for any business-related purpose, such as purchasing inventory, upgrading equipment or marketing their businesses. In contrast, banks often place restrictions on how the loan funds can be used, which can limit a business’ ability to grow and expand.
Could your company use a little extra cash?
Contact Unity Payments to learn about our merchant financing solutions! We provide fast, easy and secure working capital for any business need. Our program offers up to $250,000 in simplified and reliable funding. For more information or to get a free quote, please don’t hesitate to call us at 1-800-661-3761 or email us at [email protected] to learn more.