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Merchant cash advances: A great idea for your business?

Henry Githinji

Henry Githinji

Henry plans to be an entrepreneur with his own financial consultancy firm, specializing in in binary options and stock trading. Henry is a day trader and plans to use the capital he makes to launch his business. He plans to build a portfolio that attracts investors through his trading performance.
Henry Githinji

Merchant cash advances: great idea for your business!

Merchant cash and capital advances

Merchant cash and capital advances

After the recession in 2007, it became harder for businesses to get approved for bank loans, even for good companies which deserved a good credit line. Many companies instead now opt to borrow money from merchant lenders who do not conduct any checks on credit scores. A small business which has little or no credit score doesn’t need to worry about building a credible reputation before applying for merchant cash advances. Indeed, a merchant cash advance may be the only source for small businesses to get loans easily.

Merchant cash advances offer an opportunity for many businesses to repay their loans daily until they clear them. It is becoming increasingly harder for small businesses to save a specified amount of cash until the end of the month to remit it as loan repayment – daily repayment from credit card receipts enforces discipline on the borrower. The amount paid back on a daily basis depends on the amount borrowed. Most lenders take 12%-38%  of daily income until the loan is paid off. A case study can be found here that we made.

Why merchant cash advances are preferred

   Merchant cash advances are preferred by many because of the many options they favor borrower liquidity. The following are some of the reasons why they are preferred over traditional bank loans especially when it comes to small business loans.

  1. Flexible payment

    Flexible payment

    Flexible payment

You will be able to repay your loan on a daily basis using your credit card. Merchant cash advance lenders will deduct an agreed percentage of your credit card sales on a regular basis until the loan is paid off.

  1. Credit card scores are not considered

Unlike traditional banks, merchant cash advance lenders don’t take into consideration credit scores. In fact, businesses are still able to get merchant cash advances from lenders even with bad credit ratings. The amount you can borrow depends on the business profits and future sales projections.

  1. They are quick

Funds can be obtained as quickly as within 24 hours. In most cases, it is usually within a week or so. There is no heavy paperwork and this ensures that the process is not slowed down.

  1. You won’t have to lose your business

Merchant capital advances are unsecured business loans which mean that collateral is not required. You do not or are not required to forfeit any personal or business asset if your sales plunge and you are unable to pay the loan.

  1. When your sales are down, your payment is too

The repayment schedule is based on a fixed percentage and as such, repayments adjust on how well or bad your sales are doing. The advantage with this is that if your sales are lagging, you will repay less giving you enough time to manage your small business loan.


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