Merchant Cash Advances VS. Business Loans 

Businesses in need of cash have a number of options available to them to attain it. Merchant cash advances and business loans are two of the most utilized. Merchant cash advances and business loans are similar in a number of ways. They both offer lump sums of cash, when a company requires capital on short notice.

merchant advance funding

Merchant cash advances are not technically considered loans. Because they are not, they are not subject to those regulations, state or Federal, that banks must adhere to. Companies that provide merchant cash advances buy future receivables from businesses at a discount. The discount is given in exchange for cash. After the exchange, every time that company makes a credit card sale, the merchant cash advance provider will receive a percentage of the sale until the advance is repaid.

Both merchant cash advances and business loans have their advantages and disadvantages. For instance, merchant cash advances require far less paperwork than business loans. They are generally easier to obtain and less difficult to qualify for than bank loans. In the majority of cases, a business can have cash in-hand in less than a week.

Bank loans are much more difficult to qualify for, especially, in today’s economy where loans are much more difficult to come by. Merchant cash advances are much easier to obtain.

Merchant cash advances are available to businesses that have a history of credit card or debit receivables. They are a good alternative for those companies unable to qualify for bank loans. The fact that these types of advances don’t require that a business make scheduled payments is a plus. They are allowed to pay as they receive credit or debit card payments from their customers. When business is down a company’s payments will decrease because all monies paid are a percentage of that businesses’ credit or debit receipts. This differs a great deal from bank loans where a certain amount of money must be repaid every month until the loan has been paid in full.

Perhaps, the biggest disadvantage associated with merchant cash advances is that they are more expensive than bank loans. Businesses can often save money by obtaining a bank loan that is if they are able to qualify for one. Considering the fact that they are increasingly tough to come by, businesses looking to remedy cash flow problems will likely find that merchant cash advances are much surer bet.

merchant advance funding