The Pros and Cons of Merchant Cash Advance

Merchant cash advance is the ideal alternative to traditional loans for small businesses. The credit program allows small businesses to get instant cash access that they can use to fund their operations. The importance of merchant cash advance is indeed great.

That being said, merchant cash advance have certain cons that you need to know. Although, the benefits of merchant cash advance for small business firms exceed the drawbacks, still you should know about the drawbacks of the funding option to take informed decision.

Below we will shed light on both advantages and disadvantages of merchant cash advance. The information contained in the article will help you to make your mind as to whether the funding option is right for your business. 

Pros of Merchant Cash Advance

1. Instant Approval within 24 hours – The best thing about merchant cash advance is that you can get instant access to cash in as little as 24 hours.

2. No Application Fees – Another benefit of merchant cash advance is that most lenders do not charge any fees on submitting loan application.

3. Minimum Paperwork Required – Merchant cash advance require minimum paperwork and documents. You can obtain the funds easily without the need to submit various documents as is the case with traditional loans. 

4. Flexible Repayment Option – One of the great benefits of merchant cash advance is that you can repay the amount at convenience. Unlike traditional loans, there is no strict repayment schedule of merchant cash advance.

Cons of Merchant Cash Advance

1. High Fees – The biggest con of merchant cash advance is high fees. The fees charged by merchant cash lenders range from 15% – 80% APR (Annual Percentage Rate) of the funds obtained. You must be aware of the fees charged by the merchant cash lender to decide whether it is an affordable option for you.

2. Purchase a Portion of Future Revenues – Another thing you should realize is that technically, merchant cash advance is not a loan. With merchant cash advance the lender purchases a portion of your future revenues at a discount. This adds convenience in repayment of the loan but also reduces the net future revenue of the firm.

3. Not Governed By Usury Laws – You must know that merchant cash advance is not governed by any usury laws. The interest charged by lenders can be very high, tough some lender charge low interest. So, you keep this point in mind when shopping for an ideal merchant cash lender.

Bottom-line, merchant cash advance greatly helps in easing financial burden of small business concerns. Small businesses can gain instant access to cash flow whenever required. The best thing about merchant cash advance is that it requires no collateral, application fee, or high credit score. What’s best is that you have flexibility of paying the amount at convenience when the revenue increases. In short, merchant cash advance can serve as a financial lifeline for small businesses.

If you want to know more about merchant cash advance program, you are welcome to drop us a comment below or fill up an online application here.