Let’s assume you are an owner of a small business. Since you are in need of some capital at present, a merchant cash advance might be the best option for you. But before you take any step, you first need to understand what the procedure holds for you.
Merchant cash advance is best known to carry annual percentage rates. These rates consist of the entire cost of a loan option you select. It is said by the professionals that these costs can give rise to severe cash flow issues. However, in some situations, merchant cash advance can also lead to a debt tarp. No matter how much you try to pay back, things do not fall in the right place and there is a lot you have to go through. This is one major reason why not a lot of people consider MCAs to be the best financing option. Hence, it is vital to understand both the benefits and drawbacks of MCAs before you make a move.
Understand merchant cash advance
For people who do not know anything about merchant cash advance loans, this is a substitute for other traditional loan options. Providers for MCAs say that the money which is lended to the borrower is not basically a loan. What happens is the provider will offer an upfront sum of cash. This way you can manage your future sales and also pay the money back to the lenders side by side.
How does the concept of MCAs work?
The MCAs loan options have been in the industry for some time now. It is for businesses who get revenue from debit and credit card sales, and retail shops and cafes are no exception. However, at present this loan option is also available for other businesses who do not completely depend on debit and credit card sales.
Merchant cash advance repayments are divided in two various methods. First, you can receive cash only if you keep something as a guarantee or you can get cash and you need to repay it back every week from your bank account. The second option has gained a lot of popularity with time. Most of the business owners have opted for this method. Instead of paying the money back later, what happens is the money is deducted from the bank account every week/month. Basically, whatever the requirements are of the business owner, they are all fulfilled by the lender. Only the eligibility criteria should be fulfilled and everything else is in their favor.
Why do business owners opt for a merchant cash advance loan option?
A lot of business owners opt for MCAs even though they have other options like the main street loan program available. Are you wondering why the same takes place? Mentioned below are some of the reasons why people opt for MCAs.
- MCAs are quick: If you opt for MCA, in a week time or so the money will be in your hand. Handover the required documents and everything will happen correctly.
- There is no need of physical collateral: There is no denying the fact that MCAs are unsecured. This is why there is no need to offer physical collateral. In simple words, this means that you do not have to provide the lenders with business assets. Nevertheless, it is your responsibility to give some sort of guarantee to the lender.
Want to opt for MCAs? Make a move now that you know everything about the procedure.
