Launching a new business or expanding an existing one requires sufficient working capital where it can be used to purchase office equipment, hire more employees, and buy inventory. However, it is always hard for many small businesses to obtain the funds they need to expand while maintaining normal operations. The majority of these small business owners turn to business loan companies, whereby some of them find it hard to finance a new business or those with bad credit history. Secured business loans are readily available for small businesses, and it is always preferred by the majority of business loan companies. This is because the lenders claim that the secured loans guarantee at least part of the repayment once the business defaults on the business loan. However, this is risky to the borrower since he will lose all the property that was used as collateral.

Business loan companies are the type of lenders that require a borrower to present a valuable property to serve as a guarantee for business funding. In a scenario where the company fails to pay the loan, the business loan companies will repossess the assets used as collateral. In essence, the loan provider will sell the property to recover the loan amount given out. Note that secured business loans are not the best business financing method as other alternative lending options offer favorable terms. Some of these are online lending alternatives that include the merchant cash advance.

Read More: 5 Things to Know Before Taking a Loan Online

Merchant cash advance

Merchant cash advance is one of the innovative forms of lending in the alternative business funding industry. Given that the idea has only been around for a couple of years, it has already proved to be the most popular in the retail business. Unlike business loan companies that need collateral, a merchant cash advance will use your future credit card receivables to give you the advance you need. This form of lending is ideal for business that don’t have assets, but who have higher monthly sales volume.  Repayments are then deducted as a percentage of your total credit card sales, making it a quick and flexible funding solution for many small business owners.

Who is eligible for the merchant cash advance?

Merchant cash advance is suitable for any business that accepts credit/debit cards to take payments from clients. For this reason, the merchant lender can easily trace amount of income, the business generates over an average month, the lender and the borrower can agree on the advance amount and repayment terms faster than with traditional loan companies.

Read More: Merchant Cash Loans: Understanding their Need and Benefits

Benefits of merchant cash advance

When it comes to merchant cash advance, the repayments are deducted as a percentage of the revenue.  This means that the advance repayment will be based on your business’ monthly income, when you have good sales, you will pay back more, but if your business is experiencing a slow month, you will pay a small amount. These are favorable repayment terms for many small businesses because unlike business loan companies; you have a guarantee that you will be making your payments once things get tough.