When Merchant Cash Advances Are Beneficial for Startups 

A merchant cash advance can be extremely beneficial for startup companies, especially since most startups will have difficulty securing any other kind of loan for business purposes. Many other companies use merchant cash advances as well because they provide a number of benefits that traditional loans do not.

What is a merchant cash advance?

When it first appeared as a financial product, a merchant cash advance was most closely associated with companies that had a high volume of credit card sales. Over time that concept has altered, and merchant cash advances are now used for almost any other kind of future sales as well. There is no loan involved in a merchant cash advance, because a business owner is provided with upfront cash, in exchange for purchasing future assets or sales from the company.

How a merchant cash advance works

The merchant cash advance transaction is fairly simple because an alternative lender will simply review your company’s sales history to determine whether your business is suitable for a merchant cash advance. If it is deemed to be acceptable, a factor will be calculated which will then be applied to the amount of money that the retail company has to pay back. At the same time, a precise payback period will be agreed upon, so that both parties are aware of exactly how much will be paid, and when it will be repaid.

Advantages of a merchant cash advance

The first advantage of merchant cash advances is that they are easy to be approved for, which is why they’re so appealing to startups and new businesses. Another advantage is that the whole process can be arranged very quickly, often in just a few days. You also won’t need to put up any kind of collateral, since the future sales of your goods actually serve as collateral. Perhaps best of all, a company securing a merchant cash advance does not end up in debt to a lender, so there are no long-term effects from securing the merchant cash advance.

Looking for a merchant cash advance?

If your company would benefit from a merchant cash advance, contact us at Approved Business Lending. We are always glad to work with new clients to supply them with fast funding needed for business purposes, and we offer some of the best terms in the industry.


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