Again and again, you may have heard that merchant cash advances are described as alternatives to commercial loans. If you're like countless other small business owners, you might also want to know exactly what separates prepayments from small business loans. Therefore, there are four specific reasons why merchants' business development is different from small business loans and many other commercial financing methods.
Small business owners who are interested in getting a prepayment do not need a mortgage to guarantee the advance payment because the prepayment is completely unsecured. In a sense, the company's future credit card sales are used as collateral. The merchant cash advance provider purchases a portion of the company's future credit card sales and advances the money to the small business owner.
2. no limit
Typically, when applying for a small business loan, the business owner will be required to submit a business plan. The lender will review the plan. If they believe that the risk of the business plan is too great, it may result in the application being rejected.
With the merchant's advance cash, there is no business plan required, as there are no restrictions on how to use the funds. Merchants are free to use their own funds.
3. Requirements are easy to meet
The requirements for merchants to advance cash are as follows:
· Companies must process monthly credit card sales of at least $3,500
· Owner must have at least six months of own business
· Commercial leases must be kept for at least one year
· Owner may have no unsolved bankruptcy
4. Flexible repayment
Commercial loans are usually repaid through a fixed monthly repayment amount. The merchant cash advance provider offers another payment plan that allows the repayment amount to be adjusted based on the company's sales. The supplier automatically deducts a small portion of the company's daily credit card sales. Thus, if the sales are low, the repayment ratio is lower.
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