More often, financial media channels will cover topics on why financial institutions are not willing to lend and the dilemma faced by ailing small entrepreneurs. While bank executives and influential people strive to find a solution to these core issues, small business owners must understand that there are other types of alternative business finance they need to consider.

Alternative business finance is a type of funding that will play a vital role in bridging the business owner’s financial gap. Due to lack of knowledge about the alternative business finance, the majority of small business owners have resorted to other types of business lending with the high-interest rate. Note that they tend to be an expensive form of business financing due to the higher rate of interest.

One of the most common sources of alternative business finance to small business is the merchant cash advance industry.

How does merchant cash advance work?

A merchant cash advance lender is ready and willing to provide you with an advance loan in exchange for a percentage of your business’s future credit sales. It doesn’t matter whether you have a bad credit history and no collateral, you will find that it is easy to qualify for this type of alternative business finance. Note that the majority of business who partner with merchant lenders have already attempted to get a business loan from a bank and have been rejected. If your business accepts credit card payments, and the credit sales volume is strong, this alternative business finance method could be a business-saving solution.

Note that merchant cash advance is not the same as a loan such as the ones that you are tied to a fixed monthly loan repayment. With the merchant cash advance, your advance repayment will be calculated by the amount of credit card sales you make daily. A portion of these payments will be remitted by the lender to go to the advance received and the premium that you agreed upon. Note that this will be achieved in less than a year. However, if your credit card sells are not that good, you will take advantage of a certain amount of leeway since there is no due date or fixed payments.

The percentage of the credit card receivable to be deducted by the merchant cash advance lender will vary. A trustworthy merchant cash advance provider will strive to make the retrieval percentage low for your business to survive. In some situations, this translates to pulling a small portion of the credit card sales. Note that the success of the small business has a connection to the well-being of the merchant provider. This is because if your business collapse, the merchant cash provider will lose their advance.

Merchant cash advance is the perfect source of alternative business finance that you need while struggling to keep your business afloat. If banks have rejected your loan request due to credit issues or collateral, merchant cash advance is the savior you need to be successful in business.