It seems like everywhere you turn businesses are struggling to keep their heads above water due to the economy. Somtimes it may be hard to find lending institutions that are willing to let go of money unless the business has an outstanding credit rating which is sometimes hard to obtain during slow economic times. An option that many businesses should consider is a Merchant Account Advance. This type of funding for business is a type of temporary loan for merchants who accept credit cards. Normally the borrower will get his money advanced for 9-12 months. This advance is unique because it is not a loan so there is not a fixed payment for the merchant each month. Instead merchants pay back the advance with each swipe of a customers credit card. Up to 10-20% of the merchant account transaction will go toward paying back the advance. This is very attractive for most businesses because if they have slow sales one month they are not paying as much toward the advance, but if they had a traditional loan from a bank they would have a fixed payment regardless of whether or not sales have increased or decreased during the month.
Another advantage of the merchant cash advance is that most businesses will qualify without having to provide Tax Returns, Financial Statements, or be a Personal Guarantor. This is also very attractive to the business owner because it can be a very daunting task gathering financial, and most business owners do not want to release that information if their has been some damage to their credit. Although business credit is one of the factors in determining eligibility it is not the only factor and in most cases if credit is poor merchants will still be approved because the payment on the advance is done automatically and the lender is not having to ask for payments each month.
One pitfall of the Merchant Cash Advance is that the merchant will end up paying a little more for the money than they would at a traditional bank. But to some businesses it is worth it because they may not qualify at their bank, and without the money they may not survive.
So if a business owner needs money and needs it fast a Merchant Cash Advance may be a viable option. The lenders are much more lenient and usually within a week the merchant will have funds wired to their account.