Merchant Cash Advance VS Business Loan. A merchant cash advance is designed to help fund small businesses through difficult times. For example, during the pandemic of 2020 many small businesses suffered financially from prolonged lockdowns and had to close their doors for weeks or months.
With businesses reopening their doors, they want to ensure that their business will strive and survive. A merchant cash advance helps with business survivability by providing sufficient funding for that company’s necessities. The amount of financing that a merchant cash advance can be offered is usually $10,000 up to $250,000, depending on the company’s needs. However, some merchant cash advances can be funded for as little as $5,000 or up to $1 million.
Merchant Cash Advance VS Business Loan
A merchant cash advance also could be the perfect opportunity for a business struggling financially or during a slow period. Many industries suffer from a quiet period during the winter months and might need extra cash to make ends meet. For example, seasonally-based companies might prefer this option over a business loan. Of course, this also depends on your credit score.
Your credit score could be a significant factor in deciding between a business loan or a merchant cash advance. Most businesspersons choose a business loan over a merchant cash advance if they have excellent credit because a business loan is paid differently than a merchant cash advance.
Business Loan
A business loan is paid back with payments set by the terms of the loan agreement. In contrast, a merchant cash advance is paid back through credit card transactions based on business sales.
Usually, a business loan will have a lower interest rate based on your credit score. Individuals with a high credit score might choose a business loan over a merchant cash advance.
Individuals without a good credit score may choose a merchant cash advance even though it usually has a higher interest rate. On the other hand, a merchant cash advance will fund the merchant much faster, resulting in a more nimble response to a business problem or plans of expansion.
However, there are some requirements to qualify for a merchant cash advance. These requirements are not as strict as the requirements of a business loan. A business loan requires more steps to be eligible than a merchant cash advance. Here are some of the requirements needed to qualify for a merchant cash advance.
• Having a credit score of at least 500 points or higher is desired. However, the credit score is not critical for receiving a merchant cash advance unless the amount of the advance is less than $10,000.
• Funding typically occurs same day or within a 24-48 hour period via wire transfer to the merchant’s bank account.
• Bank Statements of at least 3-6 months showing zero or very few negative days or returned transactions.
• The ability to make daily or weekly payments via automatic ACH debits from the merhant’s account by the merchant cash advance provider.
• A business start date under current ownership of at least one year in the past at the time of application.
• Merchant cash advances do not report to the merchant’s personal credit profile.
It is essential to review your financial situation to determine the proper path for your company. A business loan might be the appropriate path to take if you have a high credit score. A business loan is different in its process compared to a merchant cash advance. Here are some of the requirements needed for a business loan.
• A long-term repayment of 1 year or more
• The approval process and funding will take 1-2 weeks
• Reporting to the credit bureaus
• Monthly repayments
Once you have established the best course of action for you, contact 333Funding by telephone at (702) 577-1099 or email at info@333funding.com.You can also physically meet an agent at the office located at 6375 S Pecos Rd. 224 Las Vegas, NV 89120. 333Funding can help you figure out the best path for your company. It is a duty and privilege for 333Funding to solve your financial problem by providing you with the proper steps to make the right decision.
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