How is your business doing? Maybe you want to start a new project, or perhaps you want to expand or need some extra money for another reason. A bank loan might seem like the most logical solution for you, but bank loans aren’t the only choice if your business needs a financial boost. MCAs, or merchant cash advances, may also be able to fill your needs. What exactly are MCAs, and why might they be better than bank loans?
Merchant Cash Advances: The Basics
As is the case with a regular bank loan, with an MCA you apply for a specific amount of money. With bank loans, you repay the principle one month at a time, usually with fixed-amount payments. Merchant cash advances have a different payment structure. The amount you pay is automatically deducted from the debit and credit card sales for your business.
While an MCA may not be right for your business if you mostly operate in cash or if you don’t have much of a history of accepting card payments, most businesses are likely to qualify for an MCA.
Why an MCA Might Be Better Than a Bank Loan
One of the primary advantages of MCAs is that they often offer easier approval than bank loans since your payments are made automatically. The lender doesn’t have to wonder if you’ll fulfill your financial obligation. This is a huge advantage for businesses with poor credit scores.
Another perk of merchant cash advantages is that they are straightforward. When you take out a bank loan, you have to think about things like the APR and how paying off the loan early might affect the total amount. With a merchant cash advance, you know from the get-go how much you’ll have paid when everything is said and done. There is no advantage to paying off an MCA early, so you won’t feel pressured to make extra large payments.
Everyone comes on hard times occasionally, and those months when the budget just doesn’t seem to work can put a lot of strain on you as a business owner. Merchant cash advance repayment is based on your business’ sales so you never have to worry about not being able to make a payment.
MCAs are unsecured loans. With no collateral at stake, you won’t have to fret about the possibility of losing important assets like your home.
Merchant cash advances aren’t the ideal solution for every business, but they might be just what you need. Why not look further into the possibility?