Utilizing A Merchant Advance To Obtain Business Loans

Comparable in nature to a small business loan

, a Merchant Advance is financing a small business owner gets for various purposes that is required to be paid back within a 6 to eight month time period depending on how much financing is received. Merchant Advances are becoming increasingly used as traditional banks are tightening their required stipulations for small business loan approval.

Unlike traditional bank loans, Merchant Loans don't need perfect credit. As a matter of fact, if you were turned away by the conventional banks and require access to working capital in a quick amount of time, a business cash advance may be a great solution. As a entrepreneur would expect, the stipulations placed upon such cash advance programs generally include more costly interest rates since the advance company is taking on a greater risk.

Some agreements allow the merchant tie the repayment schedule to revenue levels of the business. This is particularly useful to a entrepreneur that has noticeable variations in receipts from month to month. Payment is ultimately tied to Visa-MasterCard revenues, facilitating smaller payments during bad months. This feature is very useful to those small business owners who are seasonal in nature because a fixed payment each month is not necessary.

A Merchant Advance can be of particular use to those entrepreneurs who have not been in existence for long. To get a normal bank loan or a loan from the Small Business Association, a merchant will be asked to give proof of collateral, an extensive business history and a credit report with excellent scores. When a merchant is just starting out in business, this may not be possible, especially in today's economic situation.

However,being careful is advisable when applying for a Merchant Advance. It is not uncommon to find growing payment plans, application charges and a necessary replacement to a specific credit card provider. Reading the fine print of any contract is a must. For those merchants who find themselves in need of cash and have very little alternative options available, the business advance can be particularly helpful as opposed to waiting months for a conventional small business loan you probably won't be approved for.

by: Daniel Samoohi.

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