Top 3 Reasons Why Small Businesses Use Merchant Cash Advance

Small businesses frequently require emergency funds or short-term working capital to take care of unplanned financial crisis. By applying for a merchant cash advance from an alternative lender, instead of a traditional bank, it is possible to raise the required money faster for any business purpose. Traditional banks are unwilling to fund because of the less than perfect credit history or insufficient entrepreneurship experience on the merchant’s part. Therefore, many small business owners find this as the best cash flow or short-term financial solution available.

Here are the top three reasons, why small businesses prefer merchant cash advance over traditional small business loan.

1. Business Friendly and Flexibility

Obtaining the needed cash quickly is not the only flexibility that merchant cash advance provides. The repayment is based upon a daily percentage of future sales or credit card sale receipts. Small businesses, especially seasonal, can benefit from this type of flexible repayment method during the off-peak months, where sales volume is low and the repayment automatically adjust accordingly. A fixed monthly or weekly payment for a typical small business loan from traditional banks will not accommodate or be as forgiving during the off-peak months. Thus, many small businesses find merchant cash advance to be more business friendly due to the repayment flexibility.

2. Less Hassle To Apply

The merchant cash advance lenders provide short-term money similar to small business loans. Unlike traditional banks, they have a unique and more simplified online application process. Typical business loan application requires Tax returns of the past 1-2 years and P&L statements but the only financial documentation required for merchant cash advance application, is the recent bank statement that is easily obtainable.

3. Faster Approval

Usual business loan application process, with banks, takes months together before a decision is made. However, a merchant cash advance application approval decision and funding can occur in a few days. The speed at which small businesses are approved and funded by merchant cash advance lenders, makes it more desirable.