Qualifying for business loans becomes increasingly difficult each year. If companies do not have near-perfect credit, obtaining a business cash advance is nearly impossible. Banks are cracking down on lending money to individuals, with further restrictions imposed on small businesses in need of business lines of credit. Traditional sources of credit used to be credit card loans and home equity lines of credit, which are no longer common options for many business owners. Today, merchant cash advances are a superb alternative to traditional business loans and financing.
Even before the economic crisis rocked the U.S., several businesses preferred merchant cash advances to government-regulated conventional loans. The advantages of choosing these forms of working capital loans are outlined below.
- Fast – These types of loans are generally approved within 24 to 48 hours with funding granted within five to seven business days.
- Easy – Merchant cash advances require minimal paperwork, which averages around two pages. They do require copies of merchant and bank statements to determine the appropriate average processing volume. Bank statements help determine and verify total income.
- Approval Rate – Merchant cash advance loans have a high approval rate. They do not require impeccable credit, do not require profits and do not mandate that businesses highlight low debt-to-income ratios.
- No Personal Guarantees – While traditional banks require personal guarantees, merchant cash advances do not. Individuals may be liable for fraud or misrepresentation, which are further detailed in contracts.
- Unsecured – These types of loans are unsecured and no collateral is required.
- Friendly Payback Terms – Merchant cash advance loans offer no fixed monthly payments, which is beneficial for companies that may be having slow or seasonal months. Repayment terms for slower months are proportionally decreased, which is beneficial for companies, allowing them to still make other necessary payments, pay invoices and disburse payroll.
- No Restrictions – Fortunately, merchant cash advances offer no restrictions on how to use funding. This allows businesses to freely use funds for renovations, advertising, working capital, expansion, seasonal merchandise, new merchandise, updated equipment and much more.
- Renewals – Most merchant cash advance loans offer renewal reviews every several months, which gives businesses additional access to necessary lines of credit for new seasonal inventory and much more.
There are many benefits for businesses that work with merchant cash advance companies that offer flexible loan terms. Unlike traditional bank loans, these funds are available for more inventory options, which gives businesses the ability to further build their businesses, responding to customer demands.