Can You Get A Merchant Cash Advance With Bad Credit?
The short answer is; yes you can.
In case you haven’t heard; a merchant cash advance is a way to get working capital for your business
without having to go through the bank. Sometimes referred to as a business loan alternative, a merchant cash advance (or merchant loan) can often fund a business even though they may have less than perfect credit.
How does it work?
When you apply for a bank loan, you need to bring years worth of records, some form of collateral (usually real estate) and your business plan. The bank will then perform a credit check and proceed to pore over all your documents and records. This process takes anywhere from a few weeks to two months or more. In many cases, you are turned down because of your credit score even though your business is doing well.
With a merchant cash advance; all you generally need to do is fill out a two page form and provide 6 months of merchant statements. That’s it.
Whereas a bank focuses on your past; a merchant loan provider looks ahead to your prospective future. To qualify for a merchant cash advance, all you need is to be in business for at least 6 months, accept credit cards and process at least $3K in credit card sales each month.
How much can I get?
The amount you qualify for is in direct proportion to your monthly credit card sales. A general rule of thumb is 2.5 to 3 times the amount of your monthly average. For example: If you process an average of $10K each month, you will be funded between $25K and $30K.
How do I pay back the merchant loan?
A merchant cash advance uses your credit card processor to automatically deduct a small percentage of your daily transactions until your debt is paid back. This is usually spread across a 6-9 month timeline. One of the really cool features of this payment method is that because the payback is based on a percentage of your daily sales; you pay back less on slow days and more when things pick up. This creates a flexible payback schedule that flows with your business.
What if I can’t pay back the merchant cash advance?
A merchant loan provider works closely with the business owner to establish an advance amount and a payment schedule that makes sense to both parties. Your business success is of mutual interest.
In the event that the business owner is unable to pay back the outstanding debt, it is usually because the business has failed. These things happen. When it does happen, both parties lose.
One of the reasons a merchant cash advance is more expensive than a bank loan is because of the inherent risks involved. All reputable merchant loan providers do not require any form of collateral. Make sure you read any contracts before accepting the funds.
How do I find a reputable merchant loan provider?
Research is your best friend, and so are questions. Here is a list of basic questions you should ask before signing anything;
* How long have they been in business?
* Where are they located?
* Who are their customers?
* Are they listed in the Better Business Bureau?
* What happens if you don’t pay them back?
You might consider going to a site like http://businesscashadvancequote.com. They do all of the research for you and send your request to several providers to get you the best quote.
With the economy the way it is and banks refusing to lend money, many businesses are taking a second look at merchant loans. Because of this increased interest; many new providers have sprung up, seemingly from out of nowhere. Don’t let that keep you from getting the cash you need to make your business grow. Just be cautious.
Chris Ronk.
Chris R. writes articles about business loans and merchant cash advances for http://mysmallbusinessloans.org
Tags: Bad Credit Loans, Merchant Cash Advance, Merchant Loans