A merchant loan can be an ideal solution for a wide range of businesses. Unlike traditional bank loans, a merchant loan requires no collateral or personal guarantee. If any merchant loan provider has shown themselves to be untrustworthy; they will not be in business for very long. Applying for a merchant loan may be a great decision, if you've owned a business for at least 6 months and process at least $3,500 in credit card sales you may qualify to receive a merchant loan (AKA merchant cash advance).
As banks lend less, small business owners need an alternative method of business financing, one that relies less on personal collateral and credit scores but focuses more on promoting business sales. Merchant cash advance lenders offer something called a credit card advance or merchant loan. They look at your credit card sales history more than your credit history to determine whether or not your business gets funded.
Why choose a merchant loan? Even if you've been turned down by the bank, you can still be approved for a merchant loan. Because a merchant loan is unsecured, it carries more risk. Because there is more risk, it is more expensive.
The approval rate for merchant loans is over 80%, and the funds are deposited into your bank account in few days (usually in less than 10 days). You may already be sold by the ease in which merchant loans can be acquired, but it's the simple repayment process that makes merchant loans so suitable for merchants of retail and service-oriented businesses. A merchant loan is repaid via a business's credit card sales.
Naturally, you will want to consider all the options available before choosing between the different types of merchant loans that are on the market. If you are considering a business cash advance, be sure that you read the fine print and look over the entire application to make sure that you're not missing any hidden fees or charges (like closing costs, application fees, etc.).
While there are many companies out there offering merchant loans there are only a handful of lenders. To get the best rates you should preferably choose a direct lender and you should also screen them by calling the FTC and the BBB.
Depending on your business's credit card sales volume you may be able to receive up to $500,000 dollars in a cash advance, but the funding amount depends on your monthly credit card sales volume. Most lenders advance up to 2.5 times the monthly credit card sales amount.
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