Business Cash Advance

Are you concerned that the global credit crisis will leave your business with not enough funds? Is a poor credit score holding you back from getting a business loan? Are you afraid of losing collateral if you get a bank loan? Would you be interested in a financing option that is not only quick and hassle-free but also does not need a collateral? If yes, then you should give a serious thought to .

Pledging your home or vehicle as a security for a business loan

Although home equity loans offer low interest rates, long repayment terms and tax deductible interest make them very risky for small businesses. If your business ventures start to turn a loss, your house can be claimed by the bank.

Similarly, when you offer vehicles as collateral, you give your loan company possession of vehicle’s title. In case you fail to make your loan installments and your loan defaults, lender has the right to take over ownership of your vehicle. Pledging collateral is an extremely risky option in these economically unstable times. You can steer clear of this pitfall with merchant cash advance.

How can merchant cash advance providers offer an unsecured advance?

Pledging a security has been an obligatory part of lending since its inception. They protect lenders against a borrower’s unwillingness or inability to repay loans. How then can merchant cash advance providers not need the security of a collateral?

Let’s go into what makes merchant cash advance funding successful without a collateral. First, in the interconnected and easy-access internet age, it is simple for providers to tell apart genuine borrowers and creditworthy businesses from those not so successful. To evaluate your eligibility, lenders check your credit card sales receipts, which can be easily obtained and validated. The second reason is that repayment is not an option after you accept the contract. Since payments are deducted automatically at the credit card processor’s end, lenders are pretty much covered.

Great thing about this type of loan is that the providers only charge a percentage that allows you to comfortably maintain regular operations. As part of the agreement, a predetermined percentage of your monthly credit card sales volume is paid out to the provider. This functions well as your payment amount is small when sales are not going so well and do not turn into an needless burden.

Fitting financing solutions to business situations

While a home equity loan may be more suitable in certain scenarios, business advance is THE solution when you are looking for low-risk, speedy and hassle-free financing. The fall of the credit industry post the recession and zero collateral makes these loans just right to pull up stressed small and medium-sized businesses. It is senseless to depend on slow and unsafe banks loans when superior options are available. Business advance is the latest development in business lending. Remember, no collateral is a good thing in funding and merchant cash advance fits that bill very well.

Merchant cash advance (MCA), also called business cash advance provides you with a fast and simple means of acquiring finance for small and medium-sized businesses in exchange for a fraction of your credit card receipts. Since MCA is considered a purchase of future revenue rather than a loan, it is not bound by financial rules and is outside the purview of financial regulators. While the MCA industry is set to cross the $10 billion mark, a number of corrupt providers have entered the industry to enjoy a share of the profits. To sustain the reputation of the industry and guard you against financial malpractices, major MCA providers have collectively created the North American Merchant Advance Association (NAMAA). It is an effort to standardize industry practices so that merchant cash advance continues to grow without getting tarnished.

NAMAA has released the following suggestions to enable you to segregate honest suppliers from swindlers, and to obtain maximum benefits from MCA funding:

Inappropriate Terminology

Guard yourself against confusing or complex jargon in the MCA agreement. According to NAMAA, be cautious of MCA providers who use the word “loan” in reference to your funding deal or ask you for collateral. Be in no doubt that you understand each term in your agreement and its implications. This becomes even more essential if you are dealing with a provider selling multiple financial services along with MCA.

Risk Management Processes

MCA providers use underwriting process to examine the risk involved in lending to your business. To determine this, legitimate providers will expect you to furnish two pieces of information – number of months in business and your average monthly credit card sales. You need not submit your financial statements, tax returns or additional asset documents to be approved for the advance. Even though this financing alternative is speedy and you will receive the MCA within a week, be cautious of providers who are willing to approve the advance without verifying necessary particulars to verify your business’ health.

Collection Tactics

The merchant cash advance fraternity has come up with a set of standards to define acceptable behavior and collection tactics. To make your MCA contract beneficial and profitable, a set of appropriate collection rates have also been outlined. Inquire about these rates before signing on the dotted line.

Fixed Retrieval Rates

In a merchant cash advance transaction, the periodic repayment sum is calculated as a fixed percentage of the monthly credit card sales. During slow months, you pay back the provider with smaller amounts and during better months you pay bigger sums based on the agreed upon retrieval rate. MCA providers are forbidden from including any conditions for increase in rate in your contract or holding the right to change the retrieval rate randomly. This is to safeguard consumers from being ripped off. Double check that your retrieval percentage is clearly stated in your contract and that it cannot be changed without your written consent.

Survey the terms and conditions of several MCA providers before picking one. Ask for a sample copy of the agreement and study it minutely. Maximize on your merchant cash advance, learn about the industry best practices and standards before begin hunting for an MCA provider.

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Tag Archives: Business Cash Advance

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