Every business owner knows that no matter how big or small the business may be, there will always be a time when you need a little extra cash. Whether it’s purchasing fixtures for a new business or expanding locations for an established business, these needs will inevitably arise. When they do, a merchant cash advance may be the perfect solution for you.
So why choose a merchant cash advance over a traditional loan? Here are a few questions to ask yourself as you consider this alternative lending option.
How is Your Credit?
Unlike with a traditional bank loan, your credit isn’t as big of a factor in your approval for a merchant cash advance. More important than credit is your monthly income. If you can prove to your lender that you make enough to pay back the loan in a reasonable amount of time, you’re much more likely to be approved. Of course, having great credit is a benefit in other areas of business and life, but if you’ve damaged yours getting your business up and running, fear not. This type of funding is still a viable option for you.
How Will You Use the Money?
With standard loans, you need to be very clear on your plans for the borrowed funds. This is the case with merchant cash advances too, but with one difference. With an MCA, you can use the funds for as many different projects as you like. If you find yourself needing to replace a piece of equipment, hire a new employee, purchase inventory and get your storefront professionally cleaned, no problem. On the contrary, if you only need the funds to hire and train new staff members, that’s fine too. An MCA is like having extra money in your pocket to cover added expenses. It’s important to let your lender know your plans for the money, but unlike a traditional bank loan, your potential for approval won’t depend so strongly on your plans.
How Will You Pay it Back?
With a cash advance, the loan is paid back as you make money by giving the lender a portion of your income each month. This is why monthly revenue is more important than credit during your application. This type of repayment structure is particularly helpful for business owners who are subject to slow seasons in their business.
A merchant cash advance has many upsides, so if you find that an MCA is right for you, talk to an alternative lender today.