Small businesses are often in a cash crisis. There are very few options in such cases. You can try to borrow money from friends or family, but there is always a question mark. There are loan sharks but it is risky. There are other options for immediate cash supply without any guarantees.
Merchant cash advance is the best solution for small businesses such as hotels, restaurants, professionals, retailers, and even small manufacturers. It is a simple deal and one is never in debt to friends or relatives. It’s effective on demand, no questions asked. The process is relatively simple and there are minimum eligibility criteria, making it the best source of financing for small business owners. There are inherent advantages and the disadvantages are just a few. Consider the advantages of a merchant cash advance loan.
Fast approval, fast payout
If cash is urgently needed, there is no better source than this. You just need to apply online, submit an application, and then the process moves forward. Applicants generally receive cash in their bank account within 4 days of applying, provided all other requirements are met.
Minimal paperwork
Unlike banks and other credit institutions that require a lot of documentation, this method of financing is the easiest when it comes to red tape. It is only necessary to present the bank statement of the last six months, proof of ownership of the company and proof of identity and residence. That’s that.
Best for people with bad credit
People with bad credit can find themselves in a bind with no one willing to even consider their request for temporary funds to overcome their difficulties. If they go this way it’s a relief and they can really get back on their feet. More specifically, your credit rating can improve with the help of the right lenders.
Best for companies looking to expand or launch campaigns
Traditional lenders may insist on a robust project report to show why the borrower needs funds, how they will use them, and how it will help them generate income. Small business owners rarely have the resources or want to pay a licensed financial specialist to prepare such documents. Following this path helps them raise cash to help them expand their business, buy equipment, modernize, renovate their retail store, or launch regular campaigns to attract customers.
No warranty
One of the best advantages borrowers like is that no collateral is required. Just your personal word is enough to help them get their hands on much-needed cash.
Easy refunds
MCA rebates are generally tied in as a percentage of daily credit card sales. You can also opt for a fixed monthly refund. In the first case, the refund amount is low if sales are slow and higher if sales are high. In either case, the repayment is spread over a year at which point the borrower may have used the money wisely to increase income.
Cons
The only downsides are that the factor rate is high, ranging from 1.2 to 1.5, which translates to an interest rate of 20% to 50%. But of course, an unsecured loan is always expensive. Another factor is that the business should have been around for at least a year or so with a minimum turnover of $ 10,000. These are minor drawbacks.
The advantages of CAM far outweigh the minor disadvantages.