When you need money for your business, it is important to closely examine your financing options. A merchant cash advance offers quite a few benefits that you should learn about before deciding what to do. This is one of the more flexible ways to borrow money for your business when you are ready to grow and expand. Lots of small and medium-size businesses in the UK are choosing this financing option, and it’s important that you find out why.
1. Payments Are Based on Revenue
One of the best things about merchant cash advances is that they have very flexible repayment structures. The lender takes a certain amount of the revenue your business earns as opposed to a fixed amount each month. This means that the more money your business makes, the easier it will be to satisfy the lender. You simply will not find another financing option that is quite as flexible as this.
2. You Are Likely to Get Approved
Those who apply for a merchant cash advance are very likely to get approved. This type of financing is not based on one’s credit score, but rather the cashflow of the business that is applying. These days it can be very difficult for businesses to get traditional bank loans, which is why so many of them are choosing this option instead. There is no guarantee that you will get approved, but the odds are certainly in your favour.
3. Get the Cash You Need Right Away
With a merchant cash advance, you can get the money you need for your business right away. Those who go through a bank to get a loan will have to wait a matter of weeks, and that’s if they even manage to get approved. If time is of the essence, this is one of the best borrowing options available. The application process for these loans is designed to be simple and quick without any unnecessary complications. You can apply for a MCA online in just a matter of minutes.
4. They Are Perfect for Growing Businesses
If your business is becoming more profitable but you still need money to improve your operation and expand, this is a great opportunity to take advantage of. Since merchant cash advances are based on the business’s income, you won’t have to worry about whether or not you can pay back the money you borrow. There is nothing quite like getting the loan you need while having complete peace of mind.
5. No Collateral Needed
Unlike traditional secured business loans that banks give out, merchant cash advances do not require any collateral. You won’t ever have to worry about losing any of your own property when you choose this financing option. One of the reasons that a lot of businesses don’t like bank loans is because they need to put up their home, car or other property to secure them. This is not an issue with MCAs at all, so you won’t be taking such a huge risk.
Choosing a Merchant Cash Provider
The Merchant Cash Provider or CMP that you choose to get funding from for your business is definitely important. There are a few key things that you should look for in these providers, including experience. The longer the provider has been in this industry, the more trustworthy and reputable they are like to be. Take the time to get this information before you make a final decision.
You should also consider the quality of the provider’s customer service. If you ever need to contact the lender about any issue, you want to know that you can get the help you need without any issues. Some of these providers are better than others about providing good customer service. Spend some time finding out what customers of these providers have to say about them so you can make an informed decision. You shouldn’t have any problems with finding reviews of MCA providers online.
Are There Any Downsides to Merchant Cash Advances?
There are some potential downsides to getting a merchant cash advance that you should be aware of before making a decision either way. This can be a rather expensive way to get funding for your business.
Businesses that get these cash advances typically end up paying anywhere from five to fifty percent more than the amount they borrowed. The lender that you borrow from will determine how much you will pay back by applying a certain multiplier that is related to the amount of funding you need.
These cash advances can be a good solution for many businesses, but they are only short-term. Most of these advances are given out for a period of 3 to 15 months. Some lenders give out longer terms than others, but in general they are fairly short.
It’s also important to consider that a merchant cash advance might not solve the problem you are having with your business. Some businesses can benefit from this type of financing more than others. You do not want to take out one of these advances if your business is struggling, as your repayments will be based on revenue. If your business is doing very well and you want to expand, it could be a good option.
What Should I do?
Before you decide whether or not to get a merchant cash advance, you should consider getting advice from a finance professional. Consult with your business’s accountant before you make a decision so that you don’t have any regrets later on. Your accountant should be able to give you some helpful insight into this matter.
You also need to remember that there are many providers to choose from for a MCA, and you don’t want to select just any of them. The more time and effort you put into looking for the right provider for this type of financing, the better of a deal you will get. Look for a provider that is particularly flexible concerning repayment terms.