Merchant Cash Advance
Merchant Cash Advance: A Complete Guide For Business Owners
Today, there are several options available for businesses to obtain financial help from lenders, apart from the traditional business loans.
These funds help businesses in financing their processes and keeping them afloat in the market. One such financial aid ideal for smaller businesses is merchant cash advance.
Our team at Fund.Do consists of reliable financial services providers dedicated towards fulfilling the cash flow needs of our clients by providing them with necessary financial aids.
If you are a business operating at a smaller scale and willing to fill the financial vacuum in your organization, our merchant lenders will provide an efficient helping hand.
Before diving into our merchant cash advance services, it is important to be well versed with the concept of cash advance.
What Is Merchant Cash Advance?
Merchant cash advance is a fairly new and common form of business borrowing. It is essentially a lump sum of advance provided to businesses for funding specific operations. In return of the cash advance, businesses agree to provide a specific percentage of their future credit or debit card sales to the lender.
Businesses seek merchant cash advance for a quick access to cash to fulfill short-term business requirements. A lot of businesses prefer this mode of borrowing over traditional business loans. The key reason behind this is to get rid of the time-consuming approval process, lack of flexibility and strict credit requirements.
In case of merchant cash advance, you can get the funds deposited into your business account fairly quickly. The manner in which the merchant lenders process your application (evaluating risk and credit criteria) is different than commercial bankers.
To ascertain whether you are capable of paying back your merchant loans, the providers take your daily credit card receipts into consideration. You will be granted the advance only if your receipts indicate a fruitful financial future!
However, the rates on availing a merchant cash advance are likely to be higher than many other business finance options. This is the price you have to pay for obtaining a flexible and quick financial aid from lenders. It is important for the applicant to go through all the terms and conditions thoroughly before making a decision.
How Does Merchant Cash Advance Work?
Merchant cash advance cannot exactly be termed as a loan. Our merchant lenders provide you with a lump sum of money upfront and ask for a specific portion of your future credit or debit card sales.
Here, access to your credit card receipts does the work of collaterals in the case of traditional business loans. It all starts with you approaching our professionals and stating your requirement regarding a cash advance.
A detailed agreement is drafted by our merchant lenders. This agreement includes all necessary details regarding the advance amount, term of the advance, payment method, payback amount and holdback.
Holdback is nothing but a specific portion (generally in percentage) of the daily credit card receipts held back by you for paying us back for the advance.
Once the agreement is drawn out and both the parties agree to the terms, the application is approved and the concerned advance amount is transferred into your account at a lightning speed!
At Fund.Do, we ensure that your cash advance comes with a fair deal of flexibility.
As the amount to be repaid to our lenders is based on a percentage of daily credit card sales, the amount deducted from the your merchant account varies according to the volume of your daily credit transactions.
This implies that you will be able to pay off your merchant loans faster if you incur more credit card transactions. On the other hand, if your business is not able to make sufficient credit transactions, the amount withdrawn from your merchant account will also be less.
We make sure there is no burden on your business to pay a fixed amount of money regularly, regardless of the transactions incurred.
Methods Of Repaying Merchant Cash Advance
There are two major ways in which you can repay your merchant cash advance to us.
The traditional way of repaying the advance is holding back a specific percentage out of your credit card receipts. Here, you get a lump sum of advance that is paid by giving a slice of your daily credit card receipts. As mentioned earlier, the amount deducted from your merchant account in this case is flexible.
The second way of structuring your repayments is through Automated Clearing House (ACH) withdrawals.
Here, the cash advance you receive is repaid in the form of fixed deductions out of your business bank account. In this case, there are daily or weekly debits from your bank account, dedicated to the repayment of your merchant cash advance.
Please note that repayment through Automated Clearing House withdrawals is based on the monthly revenue of your business. Opt for this method only if you are certain of earning a specific amount monthly, out of which the deductions can easily be made.
This ACH method of repayment is preferred by several businesses. This is essentially because it ensures a fixed sum to be deducted on a regular basis, helping the borrower end their debt faster.
Both the repayment methods are equally effective, depending upon the need of the borrower. If you are uncertain about your revenue and unsure whether you will be able to pay a fixed sum on a regular basis, you can pay the merchant lender out of your daily credit card receipts.
On the other hand, if you are certain that you will earn enough and want to get rid of the debt faster, ACH withdrawals are the way to go. Whichever way you go, we will make ample arrangements for you!
Why Choose Merchant Cash Advance?
As a business owner, you can agree to the fact that there is always need for a little more money for running an enterprise.
Merchant cash advance has proven to be the borrowing option business owners have flocked to for financing their working capital, keeping their venture up and running.
Here are some of the major benefits of merchant cash advance and the reasons why you should approach us for availing this financial aid:
One of the primary benefits of choosing merchant cash advance is the fact that you will have the funds at your disbursal considerably faster as compared to other borrowing methods.
Although the timings vary from one merchant lender to another, you will receive your funds in not more than week’s time. This is critical for financing working capital. In majority of situations, business processes cannot sustain without a financial help for too long. Merchant cash advance helps you fill the financial void faster.
Unless you opt for ACH withdrawals, there are no fixed payments to be made in case of cash advance. The amount you pay to your merchant lender is based on the amount you accrue through your credit receipts.
If you take a business loan, you are required to repay a certain amount of money, irrespective of the revenue you generated. As opposed to this, merchant cash advance allows you to pay out of the credit receipts you generate. Here, there is no undue pressure on your business for repaying the borrowed funds.
This implies that your merchant advance repayments would increase if you make more credit sales and would slow down if your sales are down.
Merchant cash advance does not stress on your credit score. Applying for a cash advance is fairly simple, with the provision of sending an application online.
All that your merchant lenders would really focus on is your credit sales. They will review your credit card receipts and ascertain the money you make out of credit card sales every month. If this revenue is satisfactory, you should be eligible for receiving your cash advance. Also, the amount of advance you receive depends on the volume and frequency of your credit card sales.
You therefore need not worry about the credit score you hold, as far as you are making decent credit card sales on a monthly basis.
For most of the business loans, the lender restricts the use of funds. They ensure you use the acquired funds only for specific purposes and not for any other purpose. On availing merchant cash advance, you will face no such restrictions.
Cash advance providers allow you to spend your funds according to your will. For instance, if you avail a cash advance of $40,000, you can pay your overheads worth of $25,000, buy inventory for $10,000 and use the remaining $5,000 on your new marketing campaign.
There is always a risk of losing your assets and lowering your credit score on availing a business loan. This may affect your financial health, which further restricts you from procuring business loans in future.
Merchant cash advance does not put your financial health in jeopardy. As you are paying back the funds out of your future credit card sales, there is no need for collateral. Here, you are allowed to avail funds without the pressure or fear of losing your valuable assets. As you pay no more than a percentage of your credit card receipts, your financial health remains intact.
How To Start A Merchant Cash Advance Business?
Now that you have understood what merchant cash advance is, how it works and what its perks are, let’s understand how a merchant cash advance business can be set up.
Starting a cash advance business might require a good amount of start-up capital. However, it is certainly a profitable venture. It is essentially a win-win situation, as you are providing businesses in need with funds and are earning a handsome interest out of the same.
Businesses tend to pay around 20-40% more (or even higher) to the lender than the amount sanctioned to them. This implies that if you are ready to shell out the initial capital, you can reap in handsome profits.
However, the major risk involved in starting such a business is the risk of losing money and the uncertainty of receiving the same. As there is no fixed sum of money that the borrower has to pay, you cannot be certain of the amount you receive as your payments.
Here are some of the major considerations you should keep in mind for starting a merchant cash advance business:
Undertaking Market Research
It is extremely important to have a thorough idea of the market you will be catering to before starting your business.
Start by scouting all the companies that provide financial services in your vicinity. Ascertain the kind of loans, advances and other finances they are offering to their clients and the details of the same.
This will help you in gauging the need of your services in the market. You can also tailor your interest rates based on the value you are adding to the financial services availed by the clients in your market.
If you feel the market is already saturated, choose a different location or bring innovation to your services.
While performing your market research, do not forget to list out all your competitors. Studying your competitors and analyzing their services will provide you with a good head start.
Undertaking Economic Analysis
Along with analyzing the market you are catering to, it is important to analyze the economics of your business. This involves the matters regarding raising a startup capital and managing your financial resources.
If you are a fairly wealthy person with sufficient money you that you can use for cash advances, you do not have much to worry about. However, if you are borrowing funds to start your business and providing advances, it is important to work out the economics of the same.
Starting An Original Business Vs. Buying A Franchise
This is an important decision to make before starting a merchant cash advance business. Although it is relatively more expensive to buy a franchise, there is a surety in the venture reaping you profits.
This is because the franchise comes with a pre-earned goodwill and faith of the loyal clients.
On the other hand, starting a merchant cash advance business from scratch is a little more tedious and time-consuming. However, if you manage to strive and make your business flourish, it can reap you handsome profits in the long run, making your business sustainable.
Now that you have an idea of how to start a merchant cash advance business, let us explain how our already established business is beneficial for you!
Why Choose Fund.Do For Merchant Cash Advance?
No one likes to get into the mess of paperwork and physical documentation. At Fund.Do, we ensure that your application process is smooth and hassle-free.
In fact, you can start your application for an advance right now as you read this page, simply by clicking one button on our Home page!
The option for online application facilitates minimal documentation and provides you with an ease of operation.
We understand how precious your time is to you. Valuing this time, we ensure that the processing of your application and disbursal of funds into your account would be quick and effective.
From the moment we receive your initial application, our team would start reviewing the same, taking the process forward without wasting a minute of your precious time.
The reason behind the success of the best merchant advance companies is the team that strives for success. At Fund.Do, we have a dedicated team of professionals ready to help you whenever you are in need.
Our professionals hold significant amount of working experience in the field of finance. They are familiar with all the nitty-gritty of merchant cash advance and would assist you every step of the way.
Apart from mechanically offering you their services, our professionals would also guide you whenever you are in doubt. On being asked, they will advice you regarding important financial matters that would help the financial health of your business prosper.
Our professionals do not believe in beating around the bush. Once you approach us for a cash advance, we would directly get to the point and start reviewing your application, without wasting any of your time.
There are no unnecessary questions asked, apart from the ones necessary to process your advance. No question is asked regarding your personal credit rating as it does not affect your merchant cash advance.
All we are really concerned about is your credit or debit card receipts and your capacity to pay off your debt before granting you your cash advance.
Fund.Do is a one-stop solution not only for cash advance, but for all your financial needs. All you need to do is click a button or shoot a mail!