It turns out the number 3 has made its way into a theme throughout this week’s blog entries. So, we figured we may as well complete the trifecta by rounding out the week with one more ode to the magic number. In today’s blog, we’ll revisit some ways that merchant cash advances make better options for business owners than bank loans. As promised, here are three:
1. The money can be attained a lot faster.
When business owners are met with ideas about how to grow their companies, they generally need to get their hands on extra working capital quickly in order to put their plans into action. This is especially true when there is an opportunity to purchase some seasonal inventory. Deals with suppliers are often such that certain types of inventory are cheaper at particular times of the year. For example, winter clothes can be purchased at significantly discounted prices in the summer.
The thing is that there are usually small windows of opportunity to grab such inventory at low prices. Therefore, getting access to funding quickly is important. Without it, many opportunities to significantly increase profits are lost. With merchant cash advances, clients can receive funding within 24 hours! With traditional bank loans, it often takes weeks to receive the money – that is, of course, if you’re lucky enough to be approved for it.
2. Approval is practically guaranteed.
The list of Canadian business owners who have been turned down by their banks for business loans continues to get longer each and every day. And that’s because there is a long list of criteria for entrepreneurs to answer to when applying for traditional bank loans. Credit checks, collateral and detailed business plans are among the most popular requirements for loan officers.
Without them, business owners are often unable to secure funding from their banks. The merchant cash advance application process requires no credit checks, collateral or detailed business plans. An advance is actually a purchase of future credit card and debit card sales. Therefore, it is not a loan. The money is not borrowed. It actually belongs to the recipient to do with what he/she pleases. To approve clients, only a review of their credit card and debit card sales history is necessary.
3. The repayment process is so much easier.
When you borrow money from a bank, you are required to make monthly minimum payments in order to pay it back. You must adhere to a strict schedule that involves a specific day of the month when a specific dollar amount must be paid in order to keep your account in good standing. Making late payments can both impact your credit score and increase your interest rates, making it harder to pay off the loan in full.
With merchant cash advances, there is no repayment schedule and there isn’t a minimum payment requirement. Payments are made automatically through a small percentage of each future credit card and debit card sale. That way, no payment is made before a payment is made before the business earns the money first.