How Merchant Cash Advance is Better than Conventional Loan?
Merchant cash advance is an ideal alternative to traditional loans. The funding option offer great benefits for small business concerns. Small business owners can have instant access to cash at their disposal without much of a hassle. This proves invaluable for small business firms as they can fund their short-term operations immediately.
Merchant cash advance is far better option than traditional loans in fulfilling the requirements of small business concerns. Below are some of the reasons why merchant cash advance is preferable for small business owners to fund their operations.
1. Quick, Instant Access to Funds
Merchant cash advance can be obtained in minimum duration. The application process for traditional loans is long. And time is not on the side of small businesses that need instant access to cash to continue their operations. With merchant cash advance, small businesses can obtain funds in as low as 24 hours.
2. No Collateral Requirement
There is no collateral requirement for merchant cash advance. The personal assets and properties are therefore protected from fulfilling obligation of the cash advance. This is quite unlike traditional loans where collateral is usually a mandatory requirement of obtaining the loan.
3. No Effect on Credit Score
Merchant cash advance does not affect your credit score in any way. Your credit score is not affected if you face difficulty in repaying the loan amount. Traditional loans, on the other hand, greatly affect your credit score. In case of default, your credit score lowers thereby making it difficult for you to obtain additional capital.
4. Obtain Funds Even with Low Credit Score
You can obtain the funds through merchant cash advance even with a low credit score. This is not the case with traditional loans where you will find difficulty in obtaining the loan with low credit score.
Merchant cash lenders look at your present repayment ability instead of your past credit history to grant access to the credit. They look at your past business revenues to determine your eligibility for the cash advance.
5. Flexible Payment Structure
Finally, merchant cash advance has flexible payment structure. There is no strict repayment schedule as is the case with traditional loans. The repayment of the cash amount is linked with future revenues. You can defer payment of the cash advance during low sales, and pay back at convenience when the sale revenue increases.
From the above discussion, it is clear that merchant cash advance is far better for small business firms as compared to traditional loans. The funding option takes care of special working capital requirements of small business firms. Unlike traditional loans, the merchant cash advance does not require any collateral. Moreover, it has greater approval rate and allows instant access to required funds. This increases value of the merchant cash advance as compared to traditional loans.
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