Merchant Cash Advance vs Traditional Bank Loans
- December 5, 2018
- Written by : REIL Capital
At REIL Capital, we talk to real small business owners every day; they tell us all about their successes as well as the difficulties theyâ€™re having. One of those difficulties we hear about over and over again is funding problems. Whether we like to think about it or not, cash is king in todayâ€™s competitive business environment. Small business owners are under the most pressure of all. They have access to the capital but they need to take care of everyday expenses like payroll, supplies, and bills. This can mean the difference between staying in business and giving up on their dream.
Unfortunately, loans arenâ€™t always easy to get, especially for business owners with poor credit scores. Luckily, thereâ€™s another option to get a little working capital that doesnâ€™t rely solely on your credit score. Hereâ€™s some information about merchant cash advances and how they differ from traditional bank loans.
What is a Merchant Cash Advance?
When youâ€™re a little short on cash for the month, a merchant cash advance may be exactly what you need. It works by allowing you to borrow based on the strength of your monthly revenue. Typically, you can borrow a lump sum amounting to about 80%-120% of your monthly revenue. In exchange, you’ll have to agree for paying a percentage of daily credit and debit card sales for 3-18 months.
Merchant Cash Advance vs. Traditional Bank Loan
There are multiple reasons why small business owners rely on merchant cash advances to take care of their everyday expenses. They differ from traditional bank loans in lots of important ways. This makes them ideal for the fast-paced world of small business.
Fast and Easy Access to Capital
When you go to a bank for a loan, whether months before you actually have money in your account. If your credit score isnâ€™t so good, you may be completely out of luck. Before getting the approval, youâ€™ll have to fill out reams of paperwork, produce lots of documentation, and wait for weeks. With a merchant cash advance from REIL Capital, all you have to do is fill out our application. After this, turn in 3 months of business bank statements. If youâ€™ve been in business for at least 6 months then you should have a credit score of 480 or better. Also, you must have at least $8,000 in monthly revenue to have money approval in your account in as little as 24 hours.
A merchant cash advance is a non-recourse debt by using collateral as support. If you should default, you wonâ€™t be liable to repay any amount above the value of the collateral. With some traditional loans, you could be liable for additional money above and beyond your collateral amount in the event of a default.
Flexible Payment Terms
You should pay back most merchant cash advance with a daily remittance. Depending on the strength of your business history and your credit score, you could be eligible for weekly payments. One can also make the payments as a percentage of credit/debit card sales or as a regular, fixed amount. In addition, you may be able to receive pre-payment terms that reduce your costs if you pay back your cash advance early.
As you can see, a merchant cash advance can be a real lifesaver for small business owners who need working capital right away. If you need money for your business and canâ€™t afford to wait around for a traditional bank loan, get in touch with REIL Capital right away! Call (888) 601-7345, fill out our online contact form, or visit our website and chat live with a representative on your computer. Donâ€™t hesitate; your bills wonâ€™t wait for you!