How Merchant Cash Advances Work
Merchant cash advances are the new rage in the non-traditional financing world. This form of financial transaction is not technically a loan, and the government has not gotten around to heavily regulating it yet. It allows you to receive a certain amount of cash in return for a percentage of your credit card receipts for an agreed upon length of time until the money is paid back plus interest. Since the credit card company pays the money directly to the agent, merchant cash advances are easy to get and only require a good history of credit card receipts.
Getting quick access to money can spell the difference between keeping a business going through a rough patch or losing it all. It can also allow you to take advantage of great deals or expand your offerings to make more profit. The process for obtaining this money merely is to contact a reputable merchant cash advance agent and start the paperwork, which is minimal. They will not be too concerned about your credit, but only with the amount of the credit card transactions you do each month.
Since the government does not do much in the way of regulating merchant cash advances, you can expect the interest rates and fees associated with them to be substantially higher than with conventional types of loans. On a positive note, you never have to worry about missing a payment since the money is deducted each month automatically by your credit card provider. Everything about your payments is automatic, and you do not have to keep up with another monthly bill. The company providing the advance is likely to put a few restrictions on your operation. For example, you cannot start offering customers a discount for cash to encourage them not to use their credit cards.
Since the amount you end up paying each month is different, there is no fixed term on merchant cash advances. The contract ends when the amount plus interest and fees are paid in full. It can take anywhere from a few months to over a year to get the money paid back depending on the terms you negotiated and the amount of credit card business you do. Usually, if you need money for your business and you have less than perfect credit, at least considering this form of financing is a good idea. You should probably, at the least investigate the process further just in case you find yourself short on cash in the future. The beauty of this form of financial help is that it is quick, but you never want to rush into a deal involving money without thorough investigation.