For some cash-strapped entrepreneurs, merchant cash advances are the only hope for securing capital. These non-bank lenders often do not require the same stellar credit score that banks look for, and they can usually provide cash at short notice. What’s more, you can repay the loan based on your profits. If you have a particularly good month with sales, you can repay more that month, but if you have a slower month, you can repay less.
Before proceeding, here are some things to keep in mind:
1. Budget and Prioritize
For emergencies, or for those with a poor credit score, the merchant cash advance seems perfect. However, due to the relatively higher interest rate in comparison to traditional bank loans, you’ll want to prioritize the necessities first. Consider how much money you really need immediately. Save the luxuries and non-essentials for later, once you have more money rolling into your business.
2. Know Eligibility Requirements
It’s important for entrepreneurs to know who qualifies for merchant cash advances. For most cash advance lenders, the basic criteria is this: your small business must have been in operation already for at least one year, and your business credit card sales per month should exceed $10,000.
3. Be Prepared
Keep in mind that the interest rate attached to merchant cash advances is higher than the interest rate for traditional bank loans. If you want to get a merchant cash advance, you’ll have to be prepared for this. Consider this factor when calculating financial projections for your small business, and when figuring out how much money you need.
Biz2Credit can help small business owners navigate through all the different lending options available today. Visit https://www.biz2credit.com or call (877) 861-2210 for assistance.