Merchant Cash Advance vs. Traditional Loans
When facing financial difficulties, businesses might require an outside source for funding. Many businesses apply for traditional bank loans to get funding. However, only 13.8% of businesses that apply get approved for traditional loans. Traditional loans can be harder to get approved for for many reasons. In the end, this can leave small businesses stuck.
Luckily, there is another option available. Now, businesses can get a merchant cash advance to help cover some of their expenses. This is a great alternative to traditional loans for many reasons. Let’s take a look at some of the advantages of a merchant cash advance vs. a traditional loan.
Payback Period is Shorter
The payback for a merchant cash advance is much shorter than that of a traditional loan. With a traditional business loan, the payback period is typically around 1 to 5 years. A merchant cash advance only takes around 3 to 18 months to pay back.
No Interest Rate with Merchant Cash Advance
A merchant cash advance is unlike a traditional loan, where you pay back an interest rate. With a merchant cash advance, it is repaid through a percentage of your future sales. Therefore, there is no interest rate, but there is a factor rate. This is a set fee that will not increase over time or if the original maturity is extended.
Another benefit is that your payments are more flexible. If you are bringing in less money during a certain season, you won’t have to repay as much during that time. When your business is doing well, you will repay more. This is a great option because it allows you to pay more when you are able to and less when business is slow.
Quick Approval Process
With traditional loans, there is a long application process with an even longer waiting period. When your business needs funds, you don’t want to wait for approval. Some traditional lenders can even take months to approve businesses for a loan. Now, you can get the funds you need when you need them. The application process is quick and simple. There are much faster approval times than traditional lenders. Get approved fast so you can get back to business as usual.
You Don’t Need Great Credit
Another perk is that you do not need a great credit history. Although we consider your credit history, it is not the only thing we look at for approval. We focus more on your business. We also consider your potential to grow. To us, this is more important than your credit history.
All in all, a merchant cash advance is a great alternative to traditional loans. With faster approvals and a more flexible payment structure, you can be sure that your business thrives. Apply online today!
