Merchant Cash Advances Vs. Business Loans – The Better Option
If you are a business owner and your business is in a phase where it is losing money and you need money immediately to keep your business afloat, a loan may be the answer to your problems.
There are two types of loans that small scale businesses can get. They vary from each other on certain parameters. If you know the difference between the two types, then you probably know what’s best for your business.
The types of business loans are:
1. Merchant cash advances
2. Business loans
Just like bank loans, merchant cash advances provide a lump sum of money when you need business capital. Some differences between merchant cash advance programs and business loans are listed below.
1. Less paperwork – The process of getting a merchant cash advance is quick and easy compared to bank loans for because it involves less paperwork. You get cash in less than a week.
2. Higher approval rate – Most business startups that don’t qualify for traditional bank loans can get approved for merchant cash advance programs.
Merchant Cash Advance Programs
3. No collateral – Unlike in business loans, you do not need to put up assets like your home for collateral for a merchant cash advance.
4. Flexibility – You can use money provided to you by merchant cash advance programs any way you want. That’s not the case with business loans.
5. No fixed payback schedule – With merchant cash advance programs, you repay the cash advance according to your sales. If the business is down, your repayment slows. When you get a business loan, you have to repay it in a specific period of time regardless of how your business is going.
These are the major differences between a merchant cash advance and a business loan. If you want advice on how to go about getting one of these advances, give us a call today.