Many business owners who need extra cash start their journey by looking at traditional business or personal loans. However, committing to a fixed monthly payment can put undue stress on your finances, particularly if your business cash flow tends to have a lot of ups and downs.
If you’re looking for a flexible funding option for your business, a merchant cash advance (MCA) could be the ideal solution. Here’s a quick look at how a cash advance works and a few key ways they provide the flexibility you need.
What is a Merchant Cash Advance?
A merchant cash advance is a funding alternative that allows business owners to receive a lump sum of cash upfront in exchange for a small percentage of future credit card sales. This allows you to repay the advance over time as cash flows into your business.
7 Ways MCAs Offer Flexible Funding
When you own a business, life can be unpredictable. The flexibility offered by an MCA allows you to remain agile, giving you quick and easy access to the funds you need without unnecessary commitments.
1. No Payment Schedules
When comparing merchant cash advances vs. traditional loans, you’ll quickly see that the repayment method is one of the key differences. Unlike most loans, an MCA does not have a fixed payment schedule. Since payments are based on a percentage of your credit card sales, when business is slow, you don’t have to worry about making a large payment. Instead, your payment fluctuates at the same rate as your business income.
If your revenue decreases, your payment amount will also decrease proportionately, giving you some extra peace of mind and lowering the risk of default. When business is good and extra cash flow comes in, you’ll automatically pay a higher dollar amount on your loan, helping you pay down the balance more quickly.
2. No Prepayment Penalties
Traditional loans often have built-in fees and penalties for paying off the balance ahead of schedule. However, MCAs do not charge any prepayment penalties. If business is booming and you have a lot of cash coming in, you can pay off your balance early, lowering the total amount of interest you pay without triggering any hefty fees.
3. No Usage Restrictions
While some types of loans place restrictions on how you can use the funds, MCAs offer flexible funding by allowing you to use the money for whatever you need. Business owners often use MCAs for paying off other debts, funding marketing campaigns, remodeling, purchasing equipment, meeting payroll, or even paying tax obligations.
4. A Non-Debt Funding Solution
A merchant cash advance isn’t technically a loan. Instead, it’s an advance against your future receivables. One advantage of this is that it doesn’t show up as a debt on your balance sheet. This can help preserve your credit rating and may be a benefit if you need to seek additional financing for larger expenses.
5. Fast Access to Cash
When looking for flexible funding options for your business, speed and efficiency are critical. Zinch offers a fast and easy online application, quick approvals, and fast funding. This means that you’ll be able to jump on opportunities when they arise, rather than waiting weeks or longer for a bank to approve your loan.
6. High Approval Rates
Since MCAs are based on your future revenues, they are often available to business owners with less-than-perfect credit. While it’s typical for a lender to check your credit score while reviewing your information, this isn’t used in determining whether you qualify. Instead, the length of time your business has been open and your monthly sales are the keys to getting approved for an MCA. For example, at Zinch, as long as you have been in business for at least six months and have a minimum of $10,000 in monthly credit card sales, you’re likely to get approved.
7. High Borrowing Limits
You might think that an MCA would only be available for a small amount, but this isn’t true! In fact, Zinch offers MCAs ranging from $10,000 to $250,000. This gives you the flexibility to use your MCA for anything from the cost of daily operations to major projects.
Once you understand the flexibility of cash advances, it’s easy to see how this funding solution can benefit your business. Contact us at (714) 500-6622 to learn more about your options. You could qualify for up to $250,000 in just 24 hours.
