A business cash advance is an alternative where cash transactions work just like loans whereby you submit an application, agree to interest rates and cash advance amount and then start repaying it back. The advance that a lender gives you is automatically deducted from your daily credit card sales transactions. For you to qualify, your business must accept credit card sales. On top of that, the majority of lenders will require that merchants have a solid financial history, existing equipment or asset lease or certain credit score to be eligible. Despite all that, the approval rate for a business cash advance is much better than that of a traditional bank whereby more than 90 percent of loan applicants are accepted.
Note that a merchant cash advance loan can be costly, they are associated with arduous repayment terms, and sometimes they tend to push on companies that hardly qualify by dishonest lenders. Again, a business cash advance can be the only funding option accessible to some business. The list below provided a practical guideline on business cash advance lenders that can assist you in selecting between the good, bad or ugly.
The reputation of a company will help determine if they are the best service providers. To determine how a business cash advance lender stacks up, find out if the Better Business Bureau accredits them to offer the services and check if there is any complaint filed. Several business owners file grievances against dishonest lenders with the Federal Trade Commission. In many countries, there are merchant advance associations that offer information concerning industry ethics and practices and allows for grievances against dishonest lenders.
Also, you can also opt to ask for referrals directly from your advance lender or do a quick online search for more details. Note that good service providers will never charge for applying or assure an automatic approval.
Even though you check for references and the company turns out to be a reputable loan lender, you must also make sure that your personal service agreement favors both parties. Here are some few aspects to consider:
Penalty fees, monthly minimum amount, and other charges accumulate at a fast rate. Before signing any service agreement, it is crucial to ensure that you understand all the possible charges.
Compatibility of Merchant accounts
Typically, reputable firms have agreements with various merchant account providers, and as a result, you will not have to change your merchant service account to obtain a merchant cash advance.
In most cases, cash advance lenders will take a portion of daily credit card sales until the advance is fully paid off. If you come across a provider who asks you to pay the cash advance in full amount, it is good not to sign that agreement.
Business cash advance is a suitable source of alternative business funding for companies that require funds for operational expenses. Obtaining a merchant cash advance from a reputable lender is one of the best ways to ensure that you get the funding you need without incurring extra costs and penalties.