If you read the benefits of a merchant cash advance you still may be unsure if this is the best source of funding for your business. With so many different funding options available to you how do you determine which is better for your needs? Take a look at some of the most frequently asked questions to help you determine just that.
What are general rates of a merchant cash advance?
While rates vary depending on the perceived risk of your business, the size of the advance, and the payback term, typically a business will pay back between 20% and 40% of the amount borrowed.
Is a merchant cash advance a loan?
A merchant cash advance is not considered a loan. They are a sale of a portion of future credit card and/or debit card sales.
Will I have to switch credit card process for a merchant cash advance?
In most cases, yes you will have to switch your credit card process and point of sales system to get a business cash advance. Most merchant cash advance companies will measure and track revenue through their own proprietary equipment.
Will a merchant cash advance help my business credit?
Unfortunately, as this type of funding is not considered a loan, a merchant cash advance will not help build business credit. On the other hand, it could help you negotiate better rates and terms of future merchant cash advances.
What if my business does not accept credit card payments?
Most merchant cash advance companies require high credit car sales, generally around $10,000 a month on average, to consider funding.
What can my merchant cash advance be used for?
Because there are no restrictions on how you can spend your advance, you can use the money on virtually anything.
How is the merchant cash advance paid back?
The credit card system will automatically forward the agreed upon percentage of each credit card and debit card transaction until the entire amount due is collected.