3 reasons Why a Merchant Cash Advance Just Makes More Sense

When it comes to business loans, the options are plentiful and so are the companies willing to give you those options at a high rate of interest! ///*

So, the obvious question here is, why merchant cash advance? Why not a credit line or a small business loan?There are after allso many types of business loans out there, so why should you go for a merchant cash advance? The reasons are pretty solid actually, and we will discuss some of the prominent ones next.

Merchant Cash Advances are Not Technically Loans

Technically, a merchant cash advance is a financing option that isn’t categorized as a loan to begin with. This means that the high rates of interest thatsmall business lenders are infamous for charging on their loan amounts won’t be applicable here. Additionally, they are also sympathetic financing options that are designed to sync with your present business conditions.

When you take out a cash advance, the company providing it is technically buying a portion of your company’s future revenues, but at a discounted rate than normal. “Future” being the keyword, the business owner gets access to immediate cash and keepseverything running smoothly while generating the expected revenues without a halt. Merchant cash advances are also quite useful for handling small emergencies, big orders or unforeseen incidents.

They are Granted Fast

The time it will take for a merchant cash advance provider to approve the amount and have it transferred to the business bank account can vary, depending on the business’s reputation, requested cash advance amount, and the provider itself. Even then, most cash advances are granted and transferred in 24 – 48 hours or less.

Designed to Help Businesses, Not to Take Advantage of their Situation

Short-term loans can also be grated just as fast, but unlike business cash advances, almost all short-term loans come with the following disadvantages, which don’t apply to merchant cash advance financing.

• Short-term lenders charge exorbitant interest rates
• Their interestand installments do not take into account your actual sales/revenue generation/profits, etc.

/In sharp contrast to short-term business loans, merchant cash advances actually take your revenue generation and sales into account before charging dues. A business taking the cash advance is not bound by a term installment and a pre-decided percentage of the business’s revenue will be deducted as part of the repayment/discounted delivery, only on the actual sales revenue generated.For example, if you managed to generate a revenue of $100, and the pre-decided discount percentage was 12%, you will only be charged $12, but if you only generated $50 as revenue, you would be only charged $6.

Merchant cash advances just make more sense because they are not loans. Instead, they are true financing options for small expenses and maintenance of cash flow, aimed to help businesses instead of exploiting them. After all, which other financing/loan option will let you pay nothing if it was a bad day and you couldn’t generate anything as revenue?