MCA also known as Merchant cash advance can offer you with an excellent way to acquire funding to your company without the troubles of conventional bank finances. In this article, we’ll discuss why you must prefer MCA over expensive & sluggish bank credits.
Fast Turnaround & Processing
As opposed to traditional loan applications which can take several weeks or at times even months to move forward, your application form for MCA can be processed inside 2 – 3 days. After approval, your MCA funding is released inside one week, sometimes under 48 hours.
While traditional bank loans request you for all sorts of financial docs; you do not need to provide these types of documents to be approved for merchant cash advances. Also, you can avoid unnecessary inquiries which have become an essential component of the conventional bank finances.
Hardly Any Upfront Costs
Unlike traditional bank mortgages, you do not need to pay for any upfront fees such as application charges and closing charges to be eligible for MCA.
Better Approval Rates
In merchant cash advances, funding supplies don’t contain previous bankruptcies & low FICO as criteria for rejection. The user application is studied only on 2 major factors; the first is the number of months he/she is in the industry and the second is credit card sales per month.
Flexible Repayment Options
The funding for Merchant cash advance is very flexible & the repayment amount for each month fluctuates with your performance in the business. While traditional bank finances need you to repay a static sum each month and charge you hefty fines for missing your payment dates; MCA does not force any such conditions. You simply need to pledge a certain proportion of your future credit card deals to the finance suppliers.
When your company is flourishing, you pay back substantial amounts, and when the times are difficult, you make smaller payments. Hence, a merchant advance doesn’t pressurize your company, particularly in tough times by making you pay back huge sums or suffer severe fines.
Personal guarantees are not essential
A traditional bank mortgage needs you to have personal guarantors who promise to pay back your credit if you fail with your payments. However, the suppliers of merchant cash advance don’t ask for any such personal collateral or guarantees. They’re simply concerned with the credit card sales of your company.
No individual credit at risk
A cash advance doesn’t put your private credit/assets at risk if your business project becomes unsuccessful. So, it doesn’t affect your future capital in any way. Traditional bank credit with defaulting risk & risk of omission from future capital can’t offer you such benefits.
Merchant cash advance: Is it more expensive than traditional bank finances?
This is one common argument about merchant cash advances. But the fact is, after the global financial crisis, banks with limited funds currently charge you almost the same amounts & interests as cash advance suppliers.