| A Merchant Cash Advance is becoming | | | | owners that don't have the credit or collateral to |
| progressively more ubiquitous in today's small | | | | get funds from a normal bank. If the rate for Jo's |
| business market. The existing position of the | | | | advance is 30 percent then he would be getting |
| economy and airtight credit standard are huge | | | | the thirty thousand dollars and paying the lender |
| contributors to the increase in funds advances. It | | | | 39,000 dollars in future credit card revenues. |
| is hard for merchants to get the working capital | | | | The agent would get the $9,000 by taking a |
| that they need with the more and more tough | | | | portion of the daily credit card sales the business |
| requirements for regular Restaurant Loans. | | | | gets. Say the portion the agent takes is 8 |
| Business cash advances are an unconventional | | | | percent of daily credit card revenues and the |
| means of attaining cash for day to day business | | | | business received $10,000 in credit card sales for |
| requirements. So how does a business cash | | | | the day. The merchant cash advance provider |
| advance work? Let us explain | | | | would receive $800 (8% of the $10,000). This |
| Business cash advances are a service provided by | | | | process would keep going until the lender received |
| a funding company to a merchant that accepts | | | | the full $39,000. This payment process goes up |
| credit cards, usually in the retail or restaurant | | | | and down with the cash flow of the business. The |
| business. The merchant loan lending agent typically | | | | percentage will remain the same so if your |
| advances the small business owner a | | | | business has a slow period, you will be paying less. |
| predetermined sum of cash in exchange for a | | | | This is a huge selling point for the advance |
| portion of their future credit card revenues. | | | | product. Traditional bank loans have a set |
| For this illustration, let's take Jo's Diner. Jo might | | | | payment amount, which could be difficult to pay |
| not have enough working capital available to pay | | | | during slow times. A merchant loan has the |
| his workers or to buy new appliances for his | | | | advantage to follow fluctuations in business cash |
| kitchen. Say Joe is looking for $30,000 and he | | | | flow. |
| reached out to a Merchant Loan lender for the | | | | A business cash advance is a helpful alternative to |
| cash. | | | | Restaurant Loans. Some may believe nine |
| The lender would assess Jo's previous credit card | | | | thousand dollars is a expensive sum to pay but |
| numbers and see if he can be approved for the | | | | the conditions a entrepreneur must meet for a |
| advance. They would determine an interest rate | | | | conventional loan is becoming progressively more |
| for the cash advanced. The rate is usually more | | | | hard to attain. A business cash advance is a way |
| expensive than a traditional business loan because | | | | of obtaining quick and easy money to meet |
| the advance is typically provided to small business | | | | business working capital needs. |