Why a Merchant Cash Advance Is Better Than a Bank Loan

If your business is short on funds, it can mean ceasing operations. No one wants this to happen. If you’re having trouble paying your employees or meeting other commitments, there are steps you can take to become more solvent. A bank loan or a merchant cash advance can help ease you past these issues by giving you access to capital, but which is the better option? Here’s why you’ll want to focus on an advance from your credit card processing company instead of a loan.

No Need for Collateral

With an advance, you won’t need to put up your equipment, inventory, vehicles or real estate in case the funds can’t be repaid. You don’t even have to put up personal assets. Advances are based on your business alone. Adding liens can be both expensive and time-consuming, and they’re something a bank will require every time. Not to mention you need written permission from the bank to sell any assets put up as collateral. What a hassle.

No Upfront Costs

Banks will charge you for underwriting and due diligence before you’re even approved. With a merchant cash advance, there are no upfront fees.

Fast Access

Advanced funds can be accessed within 1 to 2 days. Banks require 1 to 3 months as they sort through all the necessary paperwork. If you need to make payroll or win a new client, immediate access to funds can make all the difference.

Repay with Ease

Rather than making a pre-determined monthly payment to the bank, your payment can be based on your actual sales. If you choose to pay back an advance with split withholding, the company who processes your credit card payments will automatically take a percentage of daily sales as payment. Thus, if sales are slow, you pay a smaller sum than when sales are great. Because of this, you’ll never make a payment you can’t afford. Banks are inflexible with payment schedules. They want payment even if it means your business will go under.

Quickly Re-Eligible

It’s easy to borrow as you need funds and pay back only what you need. Once you’ve obtained financing, you can take additional funds within 3 to 4 months. A bank is more rigid in loaning extra money. You’ll have to reapply and hope that they still find your business worthy. An advance is based solely on your amount of sales, not on your business’s or your own personal credit history.

If you’re looking for a loan you can use and repay as needed, you should consider a merchant cash advance. They’re a modern convenience based on your business’s performance rather than its credit history giving you quick access to funds in a fast-moving world.  For more assistance in getting a merchant cash advance, contact Wexum at 512-646-0902 today.

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