Small to mid-size business owners who search for growth capital do not anymore need to have recourse to angel investors. An industry within a bigger business financing industry, the microcredit companies are now offering them an immense opportunity to accumulate growth capital, often on less constraining terms and conditions. These days, if a business owner wants to apply for merchant cash advance, he or she does not need to show a good credit score for convincing big banks and lending institutions. Instead, the loan application and pre-qualification process can be completed online. There are lender websites that allow the small and mild-size business owners to enter some very basic information in order to apply for micro-loans. These companies are widely known for fast turnaround, easy approval and less paperwork. As a result, banks are fast losing their relevance to the small business owners in specific as they can now get business loans much faster and easier than ever before.
How do cash advance programs work?
More importantly, are these schemes any real good for the small business owners out there? To answer these questions, how these lending institutions operate should be inspected closely. Cash advance providers check two things for prequalifying thee business loan applicants, the gross monthly point-o-f-sale sales figure and the gross monthly business transaction figure through credit card. If they find these two figures well above their preset benchmarks, they usually do not take in consideration the credit history and do not also ask for collaterals for granting the business loans that they offer. Cash advance is in many ways similar to a loan but the interest rates are usually higher than the traditional loans offered by banks and other leading lending institutions that show favor towards the big businesses that take out larger amounts of corporate loans.
If you are going to apply for merchant cash advance, you must know the cash advance company is highly likely to take in account your future profit figures that they estimate on the basis of current sales figures. As the creditors collect a pre-agreed percentage from credit card sales every month, the repayment terms are more flexible than the large banks. You do not need to repay the amount taken as loan/cash advance within a set timeframe. Instead, you can take as many months as you need. In the world of business cash advance, nothing of fixed payment or due date sorts exists.
Growth opportunities to consider
A steady cash flow can work wonders for small businesses that often strive to deliver their best under budgetary restraints. Small business owners often miss the growth and development opportunities due to fund crunch. With business loans providers filling the gap between regular cash inflow and the precise requirements of small businesses, your business’s growth potentials can only multiply in coming years. However, as the sector is unregulated as on date, you need to try and find the best provider who is reliable and willing to give you a loan on lenient terms.