A merchant cash advance is an alternative way to fund your business that may suit your needs differently. This type of method allows for businesses to borrow money according to your future sales. In simple terms, a merchant cash advance is receiving a lump sum of money in exchange for a business’s future credit card sales.
A merchant cash advance is most suited to business that have a high turnover, not a lot of cash and use a lot of credit card or EFTPOS transactions. This is because it requires frequent repayments, often taking a percentage daily to have the advance paid off sooner. This means the lender will be paid back each day with the card sales and this will vary based on the businesses sales. For instance, if the business has slower sales in the month, a smaller amount will be deducted to pay the lender.
Basically, the lender purchases your future sales with a sum of money, and you pay back by allowing the lender to take a percentage from your credit card or EFTPOS sales until it has been paid back.
There is a number of reasons why a merchant cash advance could work for you and your business. If your business works with a lot of transactions through EFTPOS per day, you do not want to attach collateral to the loan or if you do not qualify for a regular bank loan, then this might be the lending solution for you.
Some benefits when receiving a merchant cash advance include attaining a lump sum of cash very quickly as you have a higher chance of getting approved rather than an average loan. Because there is no need for a collateral, there is less risk when dealing with a merchant cash advance. The flexibility of the payments varying with the sales of the business in the month is also an advantage.
At Lending Connect, we take our clients’ requirements extremely seriously and we aim to build relationships with lenders we 100% trust and rely on. The team at Lending Connect ensure you and your business is comfortable with the lender before allowing any money to be put through. Our growth over the few years has given us thorough insight and exposure to what companies provide our clients, and we make sure you are set up with the perfect lender for your convenience.