Fast and Simple Small Business Cash Advance Loans
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| Fast and Simple Small Business Cash Advance Loans |
Running a business nowadays is more difficult than ever because of the current business climate.
Running a small to mid-sized business in today's environment, or any business for that matter, can be difficult. It can be difficult for business owners to balance the demands of overhead, wages, and other up-front costs with their current finance needs and anticipated future working capital requirements.
A Merchant Cash Advance, Term Loan, or other quick unsecured working capital funding options may be quite beneficial in this situation. In the past, merchant cash advances were exclusively available to companies whose sales were primarily made via credit cards. This is no longer the case with the merchant cash advance or business cash advance of today.
No Merchant Account Required for Credit Cards
When merchant cash advances (MCAs) first became a viable option for US business owners, the business owner would sell the MCA company the right to all future credit card sales in exchange for daily payments deducted from the merchant's merchant account for credit card processing.
Since the introduction of ACH (automated clearing house processing), this similar idea has been utilized to advance money to companies that may have had no credit card sales in the past. Business owners can now accept payments from their business account via automatic ACH debits, on a predetermined and agreed-upon payment schedule, in place of collecting payments from their credit card processing merchant account (thus the name "merchant cash advance").
As a result, funding businesses that provide working capital products like merchant cash advances are not considered lenders. They will make it very clear in their contracts that their product is not legally a loan. The main distinction between a small business loan and a merchant cash advance is that the latter is granting an "advance against future accounts receivables."
You can see how a merchant cash advance differs significantly from conventional small company loans from this. They are not a line of credit, even though one of our MCA funding network partners at Ameri Capital Solutions has a product that functions somewhat similarly to a revolving line of credit. However, since it isn't really a business line of credit, you can be authorized with considerably lower credit ratings and much higher approval amounts.
Returning to merchant cash advances, though. A merchant cash advance or company cash advance can be the perfect solution for you if you are a business owner who might use more alternatives to handle your merchant cash flow.
This is especially true if your firm is seasonal, with varying sales based on the season. If so, you can choose to obtain a merchant cash advance to see you through any lulls in business until it picks back up.
A merchant cash advance can be a good cash flow tool for contractors in the trades who frequently find themselves in situations where they need to be able to front the cost of materials, labor, and other expenses for a large project while having to wait 30, 60, 90, or possibly longer to get paid or to receive your first draw from the construction loan provider, for example.
In this situation, the cost of not taking a merchant cash advance MCA may be significantly higher than the cost of accepting the merchant cash advance. Return on investment, or ROI, is everything. It is unquestionably worth the cost if you are earning two and a half to three times as much each month as you are spending. particularly if you can't qualify for less expensive small company loans elsewhere.
Everything about a business cash advance is precisely the same as a merchant cash advance, except the way through which payments are made. Even though there is a difference between the two, business loan brokers like us at Ameri Capital Solutions typically just refer to both of them as an MCA or merchant cash advance.
A merchant cash advance may resemble a standard short-term business loan in certain aspects, with the exception being the more frequent payments, which may be made every day (5 business days per week). But it most certainly isn't. A fledgling company could also receive a standard business loan, albeit this is uncommon. A current firm must have at least 4 to 6 months' worth of receivables that it can prove to qualify for business and merchant cash advances.
What is the Process of a Business Cash Advance?
Recall that we previously spoke about how a business cash advance is basically a purchase of future sales or receivables. Even while it isn't technically a loan, it nonetheless performs many of the same duties as one. This refers to the fact that you were given or lent money that wasn't yours, and using that money will cost you money.
If you accept a business cash advance or merchant cash advance, you will have your funded amount, or the amount of money you were advanced, or essentially lent, and you will have your "payback amount," which is the principal amount you received plus the funder's fee, which is represented as a "factor rate" and is, in a sense, your interest.
Therefore, the MCA company's contract with you won't specify an interest rate for you, and they don't employ an APR, or annual percentage rate.
A factor rate is what?
Your cost of borrowing on that $100,000 will be $25,000, which is also a $25,000 tax deduction for the company when you receive your merchant cash advance contract. For instance, it might say, "ABC Company approved for $100,000 at a 1.25 factor rate. The payback amount is $125,000." You undoubtedly realize that the payback amount is obtained by multiplying the funded amount by the factor rate.
You can calculate your flat rate or simple interest rate in this manner. It is not an annual percentage rate (APR) like your car or house loan, where you pay a specific amount of interest on the borrowed money each year or each year.
On the amount funded, you are returning a certain amount of interest. Despite not being called interest, your interest in the 1.25-factor rate example is 25% of $100,000.
Legally speaking, the cost of money on an MCA is not referred to as interest.
Once more, this factor rate is not what is referred to as interest technically or legally. But practically speaking, it performs the same role. It is the cash you fork out to utilize the lender's funds. It has grown to be a very popular area of small business financing since it is quite lucrative for the funding businesses and their investors. You might also refer to it as the "cost of the money."
Anyhow, as soon as the business owner is funded, payments start to be collected right away via the ACH payment mechanism. If you have a daily payback agreement, you must make your first payment the next day. If you select a weekly payment schedule, your first payment is due exactly one week after you get funding.
However, not every BCA or business cash advance arrangement is daily or weekly. Additionally, they might occur twice weekly, three times weekly, biweekly, or in unusual circumstances even monthly.
The funding firm performs a reconciliation at the end of every month, if necessary. The funder can actually owe a refund to the business owner's bank account if the owner's sales fall below the minimum predetermined sales percentages outlined in the contract.
However, this doesn't frequently occur, and many funders won't just do it. They may continue to withdraw the same payment amount no matter what unless you order them to do otherwise, if you, the business owner, are not on top of things.
What Advantages Do Business and Merchant Cash Advances Offer?
A business merchant cash advance, unlike a bank, can be able to finance to your business account the same day that you applied. A regular bank, credit union, or other traditional lenders are usually never able to provide same-day finance.
Request Your Free Funding Programs Overview PDF Now by visiting our website.
Businesses with poor credit can still receive funding. Although the funding is dependent more on your daily, weekly, and monthly revenue than it is on your credit score, you may still be able to get authorized for an MCA or BCA to help support the growth of your business if you have bad credit.
However, you might anticipate reduced rates or a lower factor rate if you do have a strong credit score. Although it functions essentially like one, the cost of a business cash advance is technically not an interest rate, if that makes sense.
Additionally, even though 3 years is probably the longest period you will ever see, there is no legal restriction on the length of the term for an MCA or BCA, whether it be short or long.
Application procedures are quite simple. Typically, getting accepted only requires a one-page application and three to six months' worth of bank statements. You might furthermore be required to submit a tax return for bigger dollar amounts, such as $150,000 or more.
If you can't make your loan payments, the credit bureaus won't report you. It is not published either if you pay your bills on time as arranged, though.
Your own assets are never used to secure the funding. Even if the loan is intended to be given to only your business, an SBA loan (a bank business loan backed by the Small Business Administration) will encumber all of your assets, including personal real estate.
When obtaining a merchant cash advance or business cash advance, the funds are, on the other hand, practically wholly insecure and unbacked by any assets. Although the contract may technically be for the "purchase of your future sales," if you stop making sales and don't pay, the cash advance firms have no property they can seize or foreclose on.
Additionally, the majority of MCAs and BCAs do not call for a personal guarantee. However, if you are prepared to provide a personal guarantee, there are a few cash advance lenders who will give you a higher rate and set of conditions.
Finally, you can spend the money from MCAs and BCAs however you see fit. Your choice on how you use your one-time infusion of operating capital is your own. However, the funding company's underwriter will inquire about your intended use of the funds before you actually receive them.
They might scuttle the contract if you do not explain to them the money's legitimate commercial uses. Once funded, though, you are free to use the funds however you like.
Every business is unique.
Each American business owner has a unique set of circumstances, including time in business, credit, income, etc. In many cases, businesses may find themselves in situations where credit cards are insufficient to cover a shortfall in funding. Some people have poor credit or credit issues.
Although conventional small company finance loans offer the lowest cost of capital, access to those loans is limited due to conventional lenders' notoriously low-risk tolerance.
Absent collateral? Zero Loan.
They usually aren't very flexible if you don't have real estate or other forms of collateral or if you run the kind of business they don't want to work with. For a substantial portion of US firms that want access to more flexible funding choices, merchant cash advance, and business cash advance finance organizations offer a workable short-term answer.
Why Many USA Business Owners Use MCA Style Financing Options and a Summary of What Those Options Contain
Having a Low Credit Score as a Small Business Owner
The majority of bank and credit union company financing options, including online banks, are not accommodating when it comes to giving firms with owners who have credit scores between 650 and 700 access to money. In this aspect, their lending standards are exceedingly stringent and based on a very low-risk tolerance.
They are not willing to work on underwriting a file for companies that do not fulfill those minimal credit requirements for a few hours because they are slightly overloaded with business financing applications.
Request Your Free Funding Programs Overview PDF Now by visiting our website.
Less than two years in business for a small business owner
In the USA, 25% of new firms fail in the first two years. Because of this, the majority of traditional business financing lenders deny loans to any company that has not achieved this 2-year milestone.
However, when a small business owner has less than three months in operation, merchant cash advance MCA and BCA business funding businesses might offer financing solutions. Merchant cash advances are available to small businesses around the clock online, and business loan brokers typically have more flexible hours than most banks.
The fact that banks do not like to offer unsecured working capital or other unsecured financing because it is a significantly greater risk for them hurts a very high percentage of small company loans and financing choices from conventional lenders. If the borrower defaults, there is little they can do to get some of their money back.
Request Your Free Funding Programs Overview PDF Now by visiting our website.
They could be capable of repaying loans on time, but because they lack real estate holdings to serve as collateral, they are nevertheless ineligible for access to typical bank lending.
The likelihood of them being able to acquire traditional funding decreases to almost zero when these factors are added together with the fact that they also do not have much in the way of existing business credit.
The quickest way to get funding is through an MCA.
Small businesses occasionally get into situations where the credit they have access to, say through a monthly credit card, is insufficient to cover the shortfall.
They find themselves in need of a big sum of money to deal with a significant issue that will cost them much more than even very high-interest money, and may even be fatal to their firm.
Unexpected Opportunities for Highly Lucrative Businesses
Another possibility is that US business owners, particularly those in certain industries, like construction, might come across a potentially very lucrative opportunity. However, to take advantage of it, they would need to be able to raise money very quickly—possibly within a day or two.
Request Your Free Funding Programs Overview PDF Now by visiting our website.
A bank will not be able to assist them in this case. However, if they have a connection with a reputable company loan broker and finance facilitator, like Ameri Capital Solutions, they essentially have working capital at their fingertips or, to put it another way, in their back pocket, ready to go whenever they might need it.
Simple and Practical Application Process
Business owners can apply by phone or online, and we can often fund their requests on the same day.
We do not care if they accept credit cards or not because we can enable all sorts of finance, including an MCA or BCA, and we are much more understanding of previous troubles in their credit history.
Request Your Free Funding Programs Overview PDF Now by visiting our website.
Keep in mind that to qualify for an MCA, or merchant cash advance, the company must conduct a sizable portion of its transactions via credit card. With a BCA, however, it makes no difference whether they accept credit card payments or not because payments are debited from their business bank account and not from their merchant account for credit card processing.
Things to Think About
Do you run a small business that generates a significant amount of money from credit card sales? If so, Ameri Capital Solutions is your doorway to the best short-term MCA merchant cash advance lenders in the business if ever a situation comes where you need capital rapidly.
With us, you can quickly apply online, get funding in as little as 24 to 48 hours, and have your own personal representative. Payments are conveniently deducted from credit card sales, so your small business gets the working capital it needs right away rather than two to three months or more down the road as with traditional bank business loans.
Create and Improve Your Business Credit
Ameri Capital Solutions can even offer you advice on how to establish and strengthen your company's credit. A strong business credit history can open up future opportunities for revolving lines of credit and a wide range of other small business loans for owners.
Request Your Free Funding Programs Overview PDF Now by visiting our website.
We can also give you a list of simple accounts you may open to establish business credit tradelines that automatically report to agencies like Dun & Bradstreet and Experian Business Credit for monitoring and scoring. Because there are numerous circumstances in which a merchant cash advance (MCA) is not a viable option at all, even though it may be a good alternative in some circumstances.
Whether you do something or not, time will pass. Therefore, as your company expands and gains more time in business, you might as well start building the business and personal credit required to be eligible for as many other small business loan alternatives as feasible.
We can help you save money while processing credit cards.
No sales of credit cards?
You are still in our care. Nowadays, almost all MCA (merchant cash advance) funders now offer BCAs or business cash advances. As previously indicated, a BCA does not require you to accept credit cards or to make credit card sales, unlike an MCA (merchant cash advance).
As long as your cash flow is generally constant and your average daily balances in your company account are good, they are also highly forgiving when it comes to your credit history. Of course, they must have faith that you will have the money on hand for the routine ACH payments, whether daily or monthly.
Their underwriters' determination of the relevant payment amount based on the cash flow they can see in your bank statements will be the basis for your approved amount. They will determine your maximum approval amount based on the payment amount they believe your small business can afford.
Request Your Free Funding Programs Overview PDF Now by visiting our website.
Alternatives to Business Loans
Still, there's more! We at Ameri Capital Solutions can assist your company in a lot more ways than just providing access to a merchant cash advance when necessary. We can arrange any type of business loan or finance package, unlike our rivals.
Products Funded by Ameri Capital Solutions Include:
Up to $2 million in Unsecured Working Capital in as Little as 48 Hours
Conventional Business Loans Up to $25 Million (Sometimes More), Including SBA
Loans for Commercial Real Estate
Financing for New or Used Equipment
Funding for mergers and acquisitions
Up to $3 million in business credit lines that you only draw against when you need it
Loans with No Security
Order Payment Financing
Factoring invoices and ARC financing
We Provide Access to:
Credit unions and banks
lenders for equipment
Individual Lenders
Working capital lenders without security
Lenders of Unsecured Credit Lines
Conventional and alternative lenders for commercial real estate
Single-family and multi-family real estate investment lenders as well as hard money lenders
Fixed-Price Lenders
Cards with 0% APR for Businesses up to $100,000
Home equity lines of credit (HELOC) and home equity loans
Equity loans and equity lines of credit for investment properties