When Traditional Financing Sources Refuse You, Try Merchant Cash Advance

Cash advance industry is one of the fastest growing financing industries

. What with banks refusing to grant loans to a number of small businesses, a lot are looking for alternatives to get their hands on the much needed cash.

Getting to Know the Cash Advance Industry

Merchant cash advance industry has greatly developed and improved especially during the last few years. When banks got stricter, a lot of businesses like restaurants, who are out rightly refused of loans, went to merchant cash advance providers. But merchant cash providers clarify that they are not competing with banks. Instead, they are complementing the banks' business. These new providers are tapping on the opportunity that arose from the banks' loan refusal to certain businesses of certain industries. Furthermore, they are simply filling the financial need that traditional loan sources like banks do not consider.

How the Machinery Works

Merchant cash advance is making financing acquisition for businesses a lot easier. Some of its advantages are short processing time of just a few days, minimal paper work, no mortgages, liens, or collateral requirement. And the best part that most business finds friendly, repayment gets done based on the business' performance during the business period. This specific feature makes merchant cash advance the better alternative for many establishments due to the economic uncertainties many are facing at the moment. No fixed amount is demanded as payment of the loan. The advance gets paid on the basis of volume of sales or transactions during the given business period. The total amount due may be more than what the traditional providers' charge, but that only serves as a compensation for the risks the cash advance providers took in granting the loan.

Who could apply then? Businesses with credit card facilities. Some providers require a minimum of three months worth of credit card sales as basis for computation of the loan amount. The provider will come up with the total amount due and the debtor will pay from a percentage taken out of each credit card sale or transaction.

Moves for Regulation

This new industry promising as it is, is also vulnerable to unscrupulous players- creditors and debtors alike- out to just maximize the opportunities in the industry. In response to this concern, the North American Merchant Advance Assn was formed. This association aims to provide guidance and to help influence the merchant cash advance industry through leadership, education, and sharing of information.

Merchant Cash Advance at Present

Despite of the mixed response and views of various sectors on this new and promising industry, the current economy has provided a very fertile ground for merchant cash advance to flourish. More businesses are in need of cash for working capital infusion purposes and to help them stay afloat. With banks shortening their leash, merchant cash advance has become one significant alternative.

by: Jeff Jackson

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