3 Ways Merchant Cash Advances Can Work Better Than Bank Loans
Banks may be seen as the original “gold standard” of business financing, but that doesn’t mean that other forms of lending can’t do more than what banks do. Merchant cash advances are currently the second most popular form of business funding methods out there, and that says something pretty profound. Experts are saying that people are growing wise to the ways that merchant cash advances can exceed bank loans in terms of performance – and that’s what’s driving the boom in advances. If you’re a business owner looking for the right funding, keep these things in mind when choosing a funding method.
- Cash advances do not require collateral or down payments. This is the biggest reason why banks are so threatened by cash advances and alt lenders! There used to be a time, you needed to have money to make money. Nowadays, cash advances allow you to get the funding you need without having to put down money or offer your house up as collateral. This means lower risk for business owners – as well as a lower upfront cost.
- They also have higher approval rates and looser requirements. Some forms of bank loans have an approval rate as low as 1%. If you have bad credit, haven’t been in business for long, or have been dealing with issues with company growth, you can’t expect banks to be willing to lend you cash. Cash advance groups, though, can have approval rates as high as 70%. Needless to say, they are way more reliable than bank loans in terms of being a source of funding.
- They also are more flexible in terms of payment. Payments are based on how much your company earns, which is actually way better for a business model than a typical business loan’s rigid terms. If you don’t make money ever again, you don’t have to pay back the loan. It’s an advance, after all. Moreover, you can also pay it off early if you so choose – but it’s not something that you have to do.
Merchant cash advances have a lot of strengths, many of which have been covered up by bank lenders who want to keep profits up. If you aren’t sure whether or not a cash advance is right for you, it may be time to give us a call. At Red Payments, we can give you honest, no-obligation advice on whether you should consider a cash advance or not.