What Are Merchant Advances & How Can They Help Your Cash Flow?

Merchant advances can be of great benefit to any business owner who needs some financial assistance. Before applying for merchant advances, it is important that you are well informed and understand exactly what they are. If you are considering borrowing money for your business, find out all about merchant advances here and see if they are the right option for you.

A Breakdown of Merchant Advances

Merchant advances are a form of funding that you can acquire for your business, with the purpose of allowing you to obtain cash for business development, growth, or conception. These are different to business loans that you might be familiar with in a range of different ways.

Unlike a loan, merchant advances allow you to borrow money that is repaid when customers use a card payment to purchase your product or use your services. When this occurs, a specified percentage of each payment is deducted from each customer payment, which allows you to repay your merchant advance in a comfortable, flexible manner. Whatever your business type and whatever service or product you provide, merchant advances can be a great option when it comes to acquiring the funds you need, fast. Even with a low credit score, merchant advances allow a much wider range of borrowers to access finance than a traditional loan.

Merchant Advances Structure

A merchant advance allows you to repay the money you have borrowed bit by bit as a percentage of any card payments used at your business. You will borrow a certain amount of money which you can specify in your merchant advance agreement, with a percentage of each customer card payment agreed until the debt has been repaid. The lender of merchant advances will work directly with the card terminal provider that you use at your business, allowing them to see how much money is being moved in and out of your establishment.

Unlike a traditional loan, you will not have to undergo a credit check when applying for a merchant advance for your business. Once the lender has reviewed your business statements to find out how much money you have as a business, you will be able to borrow a merchant advance easily.  Generally, the higher your annual turnover, the more money you will be allowed to borrow for your merchant advance.

Who Can Apply for Merchant Advances?

Merchant advances are a great form of borrowing money, accessible to a large range of business owners within different sectors. Generally, as long as you have a card terminal within your establishment that the lender can monitor, and consequently take a percentage of each payment, you will be eligible for merchant advances. Having a card terminal allows the lenders to see your monthly turnover, so they can know you are a trusted borrower with an appropriate level of affordability.

If you are interested in merchant advances, search for different lenders online, ensure they have a positive reputation, and you will be able to borrow money in a comfortable, safe, and secure way.