A merchant cash advance is the best alternative to the traditional bank loan and is available to small business owners against future credit or debit card sales. This type of cash advance is a smart option for the small business that require immediate funds to meet the day-to-day operations of the firm. The finance options give you merchant cash in advance up to 100% of average monthly credit or debit card sales turnover.

The funds availed from merchant cash in advance can be used for various purposes including growth and expansion plans, purchase of tools and equipment, employee salaries, stocking the inventory or for marketing campaign expenditure. Merchant cash advances are free from hidden charges or fees as they are an advance against future sales of the company. The repayment depends on the actual sales of the business in that period, and the cash advance is recovered as a portion of sales on daily or an agreed basis. These type of cash advances are free from repayment deadlines, and the money is collected as a part of sales until the entire principal amount is recovered with any other fees or charges mentioned in the agreement. If you are a small business owner that is looking for a merchant cash in advance, the following are the features of the loan which will help you take an educated decision as to how to apply, process and repay the loan.

Purpose

Merchant cash advances make best options for small businesses when the need of funds is immediate and has no asset on hand to pledge. There are plenty of lenders on the market that are ready to advance cash to the borrowers with less than average credit or bad credit. The cash advanced by the lenders can be used for any purpose including expanding the business, launching new product line or the purchase or lease of new equipment.

Requirements

The small business owner with a merchant account and a specified amount of credit or debit card sales on a monthly basis are eligible to apply for a merchant cash advance. A merchant cash in advance is customized to businesses whose transactions are primarily done using credit or debit cards, unlike business cash loans that focus on payment received via checks. However, lending requirements vary with each lender on the market.

Repayment terms

Paying back the cash advance acquired by the borrower depends on the loan provider, but almost all the merchant cash advance lenders have a similar repaying structure. A merchant cash advance is borrowed by small businesses by discounting future credit or debit card sales. The amount advanced is paid off in small amounts as a portion of daily sales as agreed by the lender and borrower until the entire amount advanced is recovered including any fees or charges. The amount is not fixed unlike other business loans but varies with some actual sales which mean if there are no sales for the business for a particular period then the business owner is not required to pay any amount towards the merchant cash in advance availed.