Cash flow is a common problem that almost every business owner experiences at one time or another. Even if a business is profitable, you can experience financial problems under particular circumstances. For instance, inventory invoices, rent, and payroll might all become due at the same time, and you find yourself backed into a corner by other needs such as a fire or flood damages. Such situations require that look for some more funding immediately or the business might suffer irreparable damages.
Merchant cash offers immediate funding for all your business needs as long as you process some credit card transactions. The speedy processing of the advance, the flexibility of the terms, and the exemption of collateral when borrowing from a merchant cash advance provider attest to the usefulness of the financing option in dire business situations.
Merchant cash has benefits that you will not find elsewhere. The main aspect of this kind of lending is that you are not expected to provide any collateral at all. This means that merchant cash is unsecured. Due to the increased risk to the lender, merchant cash has a slightly higher interest rate than the secured loans.
You can easily determine whether merchant cash makes sense to your business by calculating the potential added benefit that the loan will mean to your business. Once you establish that the loan interest cost is greater, you are to realize that this means of borrowing has huge returns to your enterprise.
Perhaps you are wondering why merchant cash is unsecured and whether this kind of money is genuine. Here is how it works. The merchant cash lender will buy out your outstanding invoices, also regarded as account receivables. The lender will provide you with the immediate cash that your business requires at approximately 80% of the business total invoice balance.
The merchant cash provider then holds the remaining percentage less a predetermined “factor fee” of about 1% to 2% in reserve. Once your customers make the credit or debit purchases, then the merchant cash provider will collect the payment made on your behalf. Then, they will give you the remaining reserve amount. In this way, the merchant cash provider ensures that you earn as they earn.
Are You Qualified for Merchant Cash?
The main thing that worries business owners when they are searching for a business loan is whether they will qualify to get the money, including the amount that they desire. When you are borrowing a business loan from the merchant cash providers, you do not have to worry about that. Almost every business conducting debit or credit card transactions qualifies for merchant cash financing.
Merchant cash financing will depend on the quality and size of the invoices of your business. This is also the main measure of the creditworthiness of both your business and customers. As long as you are making some credit card sales, you can be sure that merchant cash can be availed to your business needs.