Merchant Cash Advance Fully Explained

By: Ryan Attelle

A merchant cash advance can assist you in getting the cash you need today, but like anything else it is very important to understand exactly how a merchant cash advance works before getting one. A merchant cash advance has many benefits. Understanding if those benefits match what your immediate financing needs are is the real question. Lets take a look at how it all works.
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Most merchant cash advance providers have a very simple funding process. Your business will be advanced a set amount of cash to start. This advancement will be based on your monthly credit card processing volume. After you have received the money, your credit card possessor will deduct a small percentage from your sales on a daily basis. This percentage is fixed. This fixed percentage will continue to be deducted until the entire advancement amount is collected.

One thing a lot of people like about merchant cash advances is that you are free to use the money how ever you want. Maybe you need to do some construction or renovations, go ahead. Maybe you are expanding, your free to use the money on that as well. Or you could just need to increase your inventory. No problem. You might want to strengthen your marketing, well you can do that too.

Most merchant cash advances have, what most would consider perks, over the other financing options. First, you and your business are not obligated to make any personal guarantees. There's also no need to put up or risk any collateral. You wont have to meet any minimal requirements, and you will not be dealing with any interest rates. Why all this? Because the advance you where given is automatically repaid though your daily credit card processing transactions.

The way a merchant cash advance is set up ensures that there is no fixed payment weighing you down. For a lot of businesses this is a great relief especially during slower times, maybe due to seasonal business. The total amount collected varies depending on your sales, but the percentage will always stay the same. Sometimes it take a little bit longer than expected to pay the money back. Unlike a loan there are no additional fees or added cost when repayment of a merchant cash advance is going slow.

Lets take a look at an example for when a merchant cash advance was put to good use. Andy is a mechanic and owns his own garage. People like him and his work and as a result business is booming. One day he noticed a new garage on the other side of town was available. He wanted to seize the opportunity to expand but did not have the money to do so . There wasn’t time for a tedious bank loan process because he had to move and move fast. So Andy turned to a merchant cash advance, was able to buy the garage, and business continues to boom.

In most cases you will find that with a merchant cash advance there are no application fees or obligations for that matter. So it is worth finding out more. If you are in need of some cash quick, and don't really have a business loan as an option than its a good idea to take a closer look at a merchant cash advance.

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