Is Merchant Cash Advance Better Than a Conventional Bank Loan?

Are you tired of waiting for banks to process your loan application? Is all the necessary paper work for your loan application making you jittery? Are you annoyed by all the intrusive questions you need to answer to procure a bank loan? Are you concerned that the fall of bank lending post the global credit crisis will leave your business short of funds? Are you looking for a fast, effective and efficient substitute for traditional bank loans? If yes, then merchant cash advance is the answer to your problems.

Merchant cash advance (MCA) provides you with a great way to procure funding for your business without the hassles of traditional bank loans. Read on to find out why you should choose an MCA over slow and expensive conventional loans.

Fast Processing and Turnaround

Unlike conventional loan applications that take weeks and even months to get processed, your merchant cash advance application is processed within 2 to 3 days. If sanctioned, your merchant cash advance funding will be released within a week, sometimes even within 48 hours.

While conventional bank loans ask you for all kinds of financial documentation, you don’t have to provide your financial statements, tax returns or other asset documentation to merchant cash advance providers. You also avoid unnecessary and intrusive questioning that is an integral part of the traditional bank lending industry.

No Upfront Charges

Unlike conventional bank loans, you don’t have to pay any upfront costs including application fees and closing costs for merchant cash advance.

High Approval Rate

Unlike banks, merchant cash advance providers are not fussy about approving applications. Funding requirements do not include low FICO and earlier bankruptcies as criteria for denial. Your application is judged only on two factors alone, number of months in business and monthly credit card sales. A poor credit history holds little value.

Repayment flexibility

Merchant cash advance funding is flexible and monthly repayment amount varies with your business performance. While conventional bank loans force you to repay a fixed amount every month and charge you heavy penalties for missing your loan repayment due dates, merchant cash advance imposes no such conditions. You pledge a fixed percentage of your future credit card sales to the advance providers.

When your business is booming, you repay hefty amounts and smaller amounts when times are tough. Thus, a merchant advance does not strain your business, especially in difficult times by forcing you to repay hefty sums or incur severe penalties.

No personal guarantees required

A conventional bank loan requires personal guarantors who guarantee to repay your loan in case you fail to do so. Merchant advance providers ask you for no personal guarantees or collateral. They are only concerned with the credit card sales of business and not the business owner.

No personal credit at stake

Merchant advance does not put your personal credit and assets at stake in case your business venture is unsuccessful. It is treated as a purchase of future sales and not as a loan. Consequently, it has no effect on your future funding. Conventional bank loans with default risk and risk of exclusion from future funding cannot offer you these benefits.

Is a merchant cash advance really more expensive?

One argument against merchant cash advance funding was that it is more expensive than conventional bank loans. However, after the global credit crisis, cash-strapped banks now charge you comparable fees and interest rates than MCA providers.

With merchant advance you can receive funds for your business immediately, at lower cost, with minimal risk and fewer hassles. It offers greater benefits and fewer problems than conventional loans. It definitely represents the next chapter in commercial lending.

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1 thought on “Is Merchant Cash Advance Better Than a Conventional Bank Loan?”

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