Pro – No Need to Use Property as Collateral

Pro – No Need to Use Property as Collateral

You can receive cash in your account within a little as 24 hours of being approved for an advance. A traditional loan provider will assess multiple aspects of your business and want to know the reason why you are seeking finance. A merchant cash advance lender is interested in your ability to repay the amount borrowed and whether the type of funding is the best option for your business.

They will ask you to submit your card payment statements and usually make a decision to approve funding within hours. Merchant cash advances are one of the fastest types of business finance.

Pro – High Approval Rate

Traditional loan providers are risk-averse and require businesses to meet strict criteria to qualify for finance. A merchant cash advance is much more flexible and accessible to companies with a shorter trading history or lower credit rating.

Pro – No Fixed Monthly Repayments

If you have a slow sales month, the amount you repay is reduced. If you have a month with a high sales volume, the amount you repay will increase. By adjusting in line with your turnover, you don’t need to worry about how repayments will impact your cash flow.

While a traditional lender will usually require you to use your property to secure funding, you don’t need to use your home or business assets as collateral to secure a merchant cash advance. Using your property to secure finance can significantly impact the amount of capital you can access. A merchant cash advance enables you to use your business’s future card payments to secure funding.

Pro – Clear and Upfront Repayment Amount

The total cost of a merchant cash advance includes the advance amount and the factoring fee. There are no interest payments. You know exactly how much you owe to the lender before you receive the advance. The amount agreed with the lender is the full amount you will repay.

Con – Short Repayment Terms

A merchant cash advance is best used as a short-term finance option to boost cash flow. The repayment terms are generally much shorter than a traditional business loan. If you need long-term finance, we offer a range of business finance solutions that may be better suited to your needs.

Con – More Expensive Than Other Types of Finance

Because a merchant cash advance involves the lender taking on more risk than a conventional loan, an advance can generally be more expensive than other finance options.

Con – Not Suitable for Every Business

If your business doesn’t process a high volume of card payments, the amount you will be able to borrow will be limited. You may find that invoice finance or debt factoring is better suited to provide the funding you need to overcome a cash flow gap.

ScotPac Business Finance A merchant cash advance can provide an immediate cash flow boost, but it’s not always the most efficient solution.

There are more suitable options for companies that offer extended payment terms to customers, and even for retail businesses that sell direct to consumers, there are more affordable finance options. Trade Finance could provide an instant cash injection to cover payments to suppliers and allow you to prepare your business to take advantage of peak sales seasons. Or, use your unpaid sales invoices to access a line of credit, without using your property for security.

We offer a range of business finance solutions to help you overcome cash flow blockages and secure your business’s long-term profitability. We’ll help you find the most appropriate funding for your business.

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