Most new small businesses require some form of outside financing to be able to achieve their goals for growth. However, they may not have the time or qualifications to go through the process of application and approval for a small business loan from a traditional bank. Getting a merchant cash advance is a viable option to allow you to obtain the funding you need. Here is some information on this method of financing so you can decide if it fits your company’s requirements.

Merchant Cash Advance Basics

A merchant cash advance provides your business with an alternative to a traditional bank loan. A lender assesses your company’s future credit card receipts and purchases a percentage of upcoming sales. This enables you to obtain funding quickly for any urgent needs.

The Process of a Merchant Cash Advance

When you acquire a merchant cash advance, you sign a contract with a lender stipulating that in return for a one-time payment, you will pay the lender back by remitting a small portion of your future credit card sales. The amount you pay back will include your payment plus the lender’s fee. You should calculate the amount you need from the lender as precisely as you can so that it meets your requirements but is not excessive.

The Benefits of a Merchant Cash Advance

One of the greatest advantages of a merchant cash advance is how quickly you can obtain the funding that you need. This enables you to use this financing tool to deal with cash flow gaps or to take advantage of unexpected opportunities that may come up. Lenders don’t require collateral for a merchant cash advance, and you can generally qualify for this type of loan even if your credit rating is low. Lenders are also flexible about payments; since they are tied to your credit card transactions, you can usually arrange to pay less when you experience a slump in sales.

For more advice on obtaining a merchant cash advance for your business, get in touch with Skogen Capital Lending.