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Cash advance loans differ from traditional business loans because they allow you to borrow against your future earnings. With this type of unsecured business loan, the lender is “advancing” the funds before you get paid, therefore providing your business with vital cash flow in times of need.
Let’s look at several instances where a cash advance loan might make sense for your business:
1. You require funds within days; not weeks
Many businesses look to banks for funding but are left in a vulnerable situation by having to wait several weeks to receive an application outcome. When you need vital cash flow for your business, each day counts.
At Zinch, we recognize business owners shouldn’t be left in the dark. Our merchant cash loans are approved within 24 hours, while funding is received in as little as 2-3 days.
2. You receive a high proportion of payments via credit card
Cash advance loans are designed for retailers receiving a high proportion of their payments via credit card, such as coffee shops, restaurants, retail clothing stores, and more. This is because these advances are borrowed against the future credit card sales of a business.
The U.S alone sees more than 108.6 million credit card transactions every day. This makes cash advance loans a viable and accessible form of unsecured business loan for a large number of businesses.
3. You have a low credit score
Your credit score is commonly used by banks and other lenders to determine your loan eligibility.
In the U.S, the average credit score is 710, which falls into the ‘good’ category. Slip below a rating of 670, however, and your credit score will be rated as ‘fair’ to ‘very poor.’ Ouch!
Even one missed payment can have a negative impact on your score and potentially restrict you from attaining a traditional business loan.
With a merchant cash advance, however, we look at your income to determine eligibility. If you’ve been operating for 6 months or more and have at least $10,000 in monthly sales, then you can quickly and easily apply for a Zinch cash advance loan.
4. Your cash flow fluctuates, so you require flexible loan repayments
A traditional business loan’s repayments are fixed, meaning that you must pay the same fee each day, week, or month – depending on the lender’s terms. With a merchant cash advance, however, there are no fixed payments to worry about.
Instead, repayments are calculated as a percentage of your credit or debit card sales. This means if your sales go down (i.e. due to seasonal fluctuations or unforeseen circumstances), so do your payments.
5. You don’t want to provide collateral or a personal guarantee
Loans from banks come with strict requirements, including the need to provide a form of collateral or personal guarantee to ‘secure’ the loan.
Collateral refers to property or another asset you pledge as security for repayment of a loan. In the event you’re unable to repay your loan, you risk losing these assets.
A personal guarantee, on the other hand, is a promise made by a person or an organization to take on the responsibility to repay the borrower’s debt if they’re unable to.
Unsecured business loans, however, forego these requirements and make applying for additional funding hassle-free. With a cash advance being a type of unsecured business loan, you don’t need collateral or a personal guarantee to apply for one.
6. You need additional capital to help support your business growth
If your business is going strong, then obtaining additional support in the form of funding is a no-brainer. A merchant cash advance can support your business with:
- Moving to a larger workplace
- Workplace renovations
- Buying additional inventory
- Hiring extra staff
- Upgrading equipment/machinery
One of the benefits of a Zinch cash advance loan is you don’t need to fully repay it to access more funds. The process is also easier and faster for existing customers as you already have an established relationship and require fewer documents to get approved.
7. Your business is undergoing a difficult economic situation
Studies show that on average, U.S small businesses suffered up to a 29% loss in sales due to COVID-19 in 2020. Whether it’s a global pandemic or a global depression – difficult economic situations can occur without much warning and instantly wreak havoc on a small business.
In order to survive and thrive, businesses can look to unsecured business loans like a merchant cash advance to provide them with vital working capital. Working capital is the money your small business has available to cover day-to-day expenses and acts as a safety net during challenging times.
Considering a cash advance loan?
Of course, this list is by no means exhaustive. Cash advance loans can be a great option for a variety of situations you experience as a small business owner. Not only do they offer flexibility, speed, and convenience, but they also don’t require collateral or personal credit.
Contact us at (714) 500-6622 to learn more about your options. You could qualify for up to $250,000 in just 24 hours.
