5 Reasons Merchant Cash Advances Are Growing
Suffice it to say that there are more people going into business for themselves these days, or opening up a new business and trying to become an entrepreneur. Going into consulting is relatively cost free, and if you have enough savings, you can survive for awhile until you get your first client. For every other business you need capital, whether you’re buying into a franchise or need money for material costs. Merchant cash advances are a way to help you get your business off the ground, or supply it with a nice infusion of cash.
If you have a Small Business Administration in your area, one of the first recommendations they’ll make is that you create a financial business plan, then try to get a loan from the bank. That can seem pretty scary because there’s a great unknown. But merchant cash advances are occurring more and more, and here are 5 reasons why.
1. Many merchant cash advance companies don’t take money back from you until you start making money. If you will accept credit cards they’ll take a percentage of your sales until the loan is paid off. That helps bring relief so that you only have to concentrate on your business.
2. You often get your cash really quickly. Unlike many bank business loans, if you’re approved for this type of program you’ll often have your money within a week. Of course this means you’ll probably want to have your plans already in place and be ready to go.
3. More firms are willing to take a chance on you. As opposed to banks, which have stiffened the criteria for getting a loan, if you have a tangible product and your business plan is solid, you’re more apt to get a merchant cash advance. Of course nothing is guaranteed, but it’s nice to know there’s someone out there ready to give you an opportunity.
4. Many merchant cash advance companies will work with you without your having to have collateral. They will check out your business plan and determine if the amount you’re asking for is legitimately able to be paid back within a specified period of time, which can range between six months to a year depending on the company and the business. You do need to know that if you go past the agreed upon date that some of these companies will potentially take all of your credit cards payments until the loan is paid off.
5. The amount of money you can obtain could be more than a bank might have qualified you for. Based on your business and the evaluation made by a merchant cash advance company, you could qualify for as much as $1 million, which is phenomenal. Just remember that however much you make, even at a low payback rate, you will have to pay it back relatively quickly, as opposed to a bank that, if you qualified with them, might give you up to 10 years to pay a loan back.
As with any time you might borrow money from someone, there are risks, so you’ll need to weigh the benefits with being realistic in what you feel you’ll be able to pay back in a relatively short period of time.