Did you know merchant advances are not business lines of credit ? You don’t need to pledge your house or car as collateral to get it. Your business cash advance application has a fast turnaround time and is evaluated with minimal financial documents and intrusive questioning. You don’t need a perfect credit score to obtain merchant loans. Moreover, there is no need for any personal guarantee. Merchant cash advance is ideal for business models like restaurants and retail stores that cannot incorporate monthly payment schedules.

Did you know that a merchant cash advance is similar to a business loan in some regards? Read on to find out the similarities between the two options, to assess the best funding option for your business.

Interplay Between Credit Card Sales and Credit Scores

Although customarily merchant cash advance companies consider only your credit card sales to assess your eligibility for merchant cash advance, your credit score can also play a major role in the approval and sanction process, like it does in your conventional loan approval process. Many merchant cash advance companies such as benchmark capital funding, shavit funding, paramount merchant funding evaluate your credit scores before approving your merchant cash advance loan.

Credit scores play an important role in three aspects of merchant loans. First, a good credit score increases the likelihood of approval of merchant cash advance financing. Although the same is not a prerequisite, considering the risk-taking nature of many business-owners, a high credit score can give your merchant cash advance application a significant edge. Second, your credit score often plays a major role in deciding your merchant cash advance amount. The better your credit score, the higher will be amount of funds you receive from your merchant cash advance company. Third, non-payment of business cash advance loans cause a huge dent in credit score which affects your future financial interests. Thus, maintaining a good credit score is in your best interest.  

Short-Term or Long-Term Repayment

Lenders risk their funds each time they offer you a business cash advance loan. The risk increases with the tenure of the cash advance loan. The higher the risk, the greater will be the cost you incur. Like a traditional bank loan or small business loan, small business cash advances will cost you more for a longer term loan vs. a short term loan.

Although traditional small business loans charge you interest payments on top of the loan amount, merchant cash advance providers need repayments in the form of fees. Fee amounts charged are similar to the interest charges on conventional loans.

When you decide to opt for merchant cash advance financing for your business, make sure to assess both credit card sales percentage per month and the total amount you will need to repay. Pay back the funds sooner to pay less.

Two-Way Approval

Merchant cash advance industry is still a new industry seeking to improve regulatory mechanisms to ensure all the skeptical practices and players are weeded out of the system. Unlike in case of conventional bank loans, you are not the only one seeking business funding approval with merchant cash advance but the merchant cash advance providers are trying to get your business, this power can get you better loan rates, terms and service.

Tags: Business Cash Advance

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