In today’s financing world, one of the options considered to be a favorite among entrepreneurs would have to be business cash advances. But why is that so?
First of all allow us to define it. A business cash advance (BCA) also referred to as a merchant cash advance (MCA) is a type of loan secured by future credit card receipts which has been determined by the loan provider’s inspection and verification of the entity’s sales and revenue. It is favored for a number of reasons which includes the following set of benefits and advantages.
- Payment is revenue based rather than fixed. – This is probably the most attractive benefit of a BCA. The payment is equivalent to a fixed percentage multiplied by the amount of credit card sales for the month. This means that you get to pay the lender when you yourself get paid by your customers. Payment will fluctuate depending on the sales volume making it cohesive with performance. This is good as it will not be burdensome to the company.
- There is no collateral involved. – A business cash advance is a great alternative to typical loans and other forms of credit when you do not have enough equity to use as collateral. At the same time, it is a method that can cater to businesses that do not want to put their properties at stake.
- It is fuss free and less troublesome. – The application and collection process is perpetually easier and painless due to its straightforward process and less need for paperwork. BCA providers will only need a few things from borrowers such as the monthly credit card receipt levels and a cash flow statement. Other forms of loan will usually require more such as credit reports, business plans, tax returns and financial statements among others.
- Perfect credit is not required. – This makes the BCA available to both solvent and struggling entities that want to recover. Remember that it is secured by future credit card sales which have no bearing on creditworthiness. Although it may be an extra point but it is not required.
- It is fast and therefore timelier. – With the shorter process and lesser need for paperwork, the BCA has quite the quick turnover of funds. It can be made available in as early as a week after application and submission of requirements.
- There are higher chances of approval. – Business cash advances are designed to rely in positive cash flows and business performance instead of creditworthiness, size and corporate value. This makes it easier for entities regardless of size, financial status and years in business to have their application approved.
Need to know more on about cash advance? Click here 365businessfinance.co.uk