Why you Should Consider a Merchant Cash Advance

Find The Right Business Funding

    • checkBorrow betweeen £1,000 and £5m, rates from 2.5% APR
    • checkFunds received in as little as 24 hours
    • check100% free, no obligation service

Written by Michael Foote , founder of Quote Goat, with over 13 years experience working in the finance, insurance and currency sectors.
06/09/2020

Most businesses, whether big or small, need an injection of cash from time-to-time. Managing finances can be one of the trickiest parts of running your business, but it’s important to keep your balance in the black if you want your business to grow and reach its full potential.

This is where borrowing capital can come in handy. Loans and other forms of borrowing such as invoice finance can help pump some life back into your business when it needs it the most. They can also help you grow by providing the funds you need to expand.

Traditional loans can be a brilliant lifeline in some situations, but another option for business owners is a merchant cash advance. This type of borrowing is similar to a loan, although it differs in some ways. Depending on your circumstances, a merchant cash advance could be more suitable for you and your business. Here’s why you should consider this type of borrowing.

More flexible repayment structure

This is by far the biggest difference with a merchant cash advance. Whereas with a traditional business loan you’ll pay back the same amount every month, with a merchant cash advance you’ll pay back a percentage of your credit/debit card sales instead. This means your repayments will be based on your takings, which can be extremely beneficial for some types of businesses.

For example, if you’re just starting out and your takings aren’t as high as you’d like them to be, knowing you’ll only pay a percentage of your card sales rather than having to commit to a set amount every month can be reassuring. A merchant cash advance can also be a great option for seasonal businesses, as you won’t have to fork out large repayments when trade is low.

Speedier process

When applying for a regular business loan, the application process can be a lengthy one. The bank will need to go over all your finances and you may also need to lay out your case with a business plan. On the other hand, getting a merchant cash advance is a much quicker process, and you could have access to the funds in a matter of days. If you need the cash sooner rather than later then a merchant cash advance is by far the quickest way of borrowing.

Poor credit not an issue

Often, when you’re getting a loan, you’ll need great credit in order to get approved. For some, this can be a real hurdle as not everyone has an exemplary credit history.

Fortunately, with merchant cash advances you don’t necessarily need great credit as the application approval will usually be based on your business’ takings rather than your credit history. As long as you can prove your business is healthy and your takings are sufficient, you should have no issues being accepted.

No need to put up any collateral

Some financing options such as a secured business loan may require businesses to put up collateral, such as property or equipment. If the borrower in unable to cover the costs, the lender may recuperate their cash by selling the collateral. With a merchant cash advance, you can borrow cash without having to worry about losing your property or goods in the event your business experiences some unexpected difficulties.

While traditional loans may be the more suitable option for some, for others the benefits of merchant cash advances make them the obvious choice. For the best deals on the market, be sure to compare deals with Quote Goat.

Business Finance Guides