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What is a Merchant Cash Advance and What Kind of Business Uses It?

A lot of people don’t understand the concept of Merchant or rather business cash advance and loans. To start with, one should figure out, what financing options are available for their business. Financing your small business requires information about the various choices available. The business cash advance loan is suitable for businesses that meet certain criteria stated later in this article. The process is simple and doesn’t need much paperwork. In some cases, they are issued within 1-2 days of applying.

A business cash advance loans is a one-time lump sum capital put into a business in exchange for a fixed royalty over a fixed period. The business cash advance is suitable for small business for a short term. They rely on the cash flow and hence there’s no requirement of collateral. The funding amount depends on a monthly average of bank deposits or credit card swipes. Businesses just need to have a steady and adequate revenue history for a business cash advance. The money is received by the small business within one to three days. The amounts range around the U.S. $70,000. A steady monthly revenue of $10,000 a month is required to qualify.

business cash advance loan

Only a set of small businesses that benefit the most from a business cash advance. Business owners should be ready for a strain on their cash flow as up to 10 to 20 percent of every dollar they earn might be gone. A few things should be checked before taking any such advances so that you can pay the money back. Buying and flipping inventory can be one way. Timing a business cash advance to cover the slow season if better revenues are expected later.

Examples of a good business cash advance business would be new businesses, ones that haven’t been in business for almost six months and businesses with an owner whose credit score (FICO) is below 600. For shop owners without many hard assets, a cash advance is a good option. Industries with many transactions every month like restaurants, bars and B2C companies like retail stores and salons can also opt for this option. Forecasting a steady flow of customers is one major criterion.

business loan

It is vital to obtain as much information about the business cash advance loan before taking this funding option. The business cash advance is a great choice for businesses with a cyclical revenue stream.

Companies usually take business cash advances ahead of holiday seasons. If a business is launching a new product line or needs some extra money to get a new client set up, a business cash advance is a good choice as some businesses can get up to $100,000 on the same day. It is a good financial backup option in case of urgent maintenance requirements for any small business. Small businesses just need to fill out an application and provide four months’ worth of bank statements to apply for a business cash advance loan.

Once you have enough information about business cash advance loan, you should consider it for your business as and when required.

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