You may be wondering: What is a Merchant Cash Advance? This type of advance can help small businesses with less-than-perfect credit. Unlike traditional loans and credit cards, merchant cash advances are easy to apply for and offer lower interest rates than most loans. While the process of applying for these loans may seem a little daunting at first, it is quick and easy, and most of the application can be done online.
The disadvantage of this type of loan is that it is fixed rate, which means that the interest rate will go up if your business grows. Besides, merchant cash advances do not offer interest savings if you repay early. Moreover, the fixed repayment schedule can put a strain on your budget. Therefore, it is important to know what to expect from a merchant cash advance before applying. To make a proper decision, read on!
When applying for a merchant cash advance, be sure to read the fine print carefully. Typically, the repayment amount is based on your business’s daily balance, and will be related to your monthly deposits. The repayment amount can range from twenty to forty percent of the advance amount. This percentage is typically listed as a factor rate and is equivalent to 1.20 – 1.40. The interest rate is based on your business’s cash flow, and a smaller percentage of the advance amount will be lower.
A merchant cash advance may be easier to qualify for than a traditional bank loan. Unlike traditional loans, merchant cash advances are not as stringent on credit score, which makes them particularly attractive to new businesses or companies with less-than-stellar financial records. A merchant cash advance may also be less expensive if you have a good credit score and strong sales. If you are unsure of your credit score, you should contact TransUnion to resolve any discrepancies.