Small businesses often run short of working capital and are not something uncommon especially when the business is growing or expanding. Whether it is to develop the company or to introduce new product line the business should have sufficient funds on hand to take advantage of any favorable market situation. Quick action is required to exploit the market conditions and applying for a bank loan may not be the viable option in such conditions. A merchant cash loan often becomes the best alternative option for obtaining funds quickly. A traditional bank loan procedure can seize the opportunity to expand or grow your business. There are several reasons for a small business to choose merchant cash advance and the top reasons are explained below.

Secured against sales

The merchant cash advance is availing funds from a lender which is different from a business. It is an agreement between alternative finance companies and online lenders which are also a purchase and sell agreement. The agreement states that in return for the funding the borrower agrees to sell the lender a portion of the business sales at a discounted price. The borrower can regain the rights of the sales once the total loan availed is repaid the borrower along with the agreed interest. The interest rates of merchant cash advance are little higher but prove to be of great help as it is tough to avail a bank loan quickly.

Simple Application Process

Applying for a merchant cash advance is simple, quick and easy where paperwork involved is very less when compared to that traditional bank loans. The application process for a merchant cash advance requires minimal documentation and is a simple process. The lenders use big data technology to gather information about the borrower, and the cash advance application can be filled online. The online application and data collection make the processing easy apart from speeding up the funding.

High Approval Rates

Every small business may experience the shortage of funds either due to expansion or due to reduced sales and look for loans from banks and financial institutions to keep the business moving. Delayed and failed payments can result in low credit score which affects the business to a great extent. Merchant advance can be availed even by the business with low or bad credit score as it is not the only factor that is considered by the lenders. Online lenders look at the whole picture, and hence the approval rates are higher than traditional loans.

Flexible Repayment

Traditional bank lending has pre-set payment amount every amount that must be paid regardless of the profit made. On the other hand, the payment amount for merchant cash advance is a set percentage of actual sales made which is quite reasonable. So, if your business is low on sales in a particular month, then your repayment amount will also be low and vice versa. Moreover, the amount payable on the cash advance is deducted from the sales made which prevents you from failing to make the payment if you forget.