Are you ready to take the plunge and make the big investment into growing your existing business? If so, know that taking out a business loan from the bank or turning your retirement money into business capital are not your only financial options.
Unsecured business loans can be a great growth investment solution, particularly for those that are looking to invest in an already promising operation. Merchant Cash Advances and business cash advances are two unsecured loan options for the venture capitalist that allow for quick growth regardless of credit scores. Here’s what you need to know.
Merchant Cash Advances are given to companies as an investment in future financial growth. Loan companies will grant cash to businesses that show strong earning potential because the recipient of the loan will promise a percentage of their daily credit/debit card sales in exchange. That percentage of sales will be paid as the cards are swiped, and will continue until all debts are paid.
- If you qualify, cash is made available within a few business days, a much quicker turn-around than banks are typically able to offer.
- Merchant Cash Advances are not considered loans, and are instead paid through future sales instead of in large monthly sums.
- As such, the amount repaid daily depends entirely upon the profits made, so the amount repaid adjusts in accordance with both profitable and slow business times.
- Lenders usually form a partnership with card-payment processors, so repayment is instantaneous and hassle free.
- Credit scores are not taken into account—loan qualification is based solely upon the strength of a business.
Business Cash Advances are an option for those that don’t receive profits through credit/debit card sales. Instead, lenders go through the business’s bank for their daily payments. One advantage of this type of loan is that the amount to be repaid is decided upon before the contract is signed, thereby eliminating all guesswork. Otherwise, this type of fund is structured as the non-credit card Merchant Cash Advance option.
These funding options are not designed to be bailouts or start-up funds, but are instead designed to be short-term loans for successful businesses to invest in their growth quickly. As such, funds can be used for a variety of purposes such as remodeling, software updates, employee training, product development, etc.
Jim Rutherford is an avid reader of Forbes and fishing blogs when he’s not working his day job as a writer for VMC Capital.