If your business meets the following criteria, you're eligible!

  • Have been operating for longer than 3 months
  • Accept Credit Cards
  • Not in personal or business bankruptcy
  • Do not have significant tax liens or judgments filed
  • Current on business property rent or mortgage

 Why a Merchant Cash Advance is the Best Option

A Merchant Cash Advance is a funding option available to small businesses that accepts credit/debit cards as a form of payment. Rather than make set, timed monthly payments, the balance is repaid by the Merchant Cash Advance provider withholding a percentage of each credit card sale conducted. There is no time frame for repayment.

If you're a business owner, you've probably done some research online and heard about this financial product from a friend. If you're intrigued or drawn to the process but concerned about the costs, there are several factors that should not be overlooked. The costs should always be put in perspective of the context. Let's go over why a Merchant Cash Advance is better than you think.

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Merchant Cash Advances are not there to SAVE your business
If you've ever applied for a bank loan, you're probably familiar with the phrase "You're only approved if you don't need the money." For those businesses past the phase of tough times and on their last leg will be quick to learn that banks are not there to save you. They only make money if the money is paid back and despite your best intentions and history, there is a chance you will default. Banks are not a charity. They want and need a nearly 100% chance you will repay the funds within the exact time frame set forth.

 

The same goes for Merchant Cash Advances. If you are not sustainable, you will not be approved. Just because the costs can be more expensive than a bank loan, doesn't make this funding option a last resort option or a trick to entrap business owners in debt. A Merchant Cash Advance is not personally guaranteed, nor is it reported to any of the Credit Bureaus. If the business fails, there is no recourse to collect. 

No collateral, no recourse if you default, and no potential negative credit impact
Look again at a loan, if the business fails, the debt is more than likely secured by collateral and personally guaranteed. A complete default will result in the confiscation of your assets. And what about your credit score? Just 1 late monthly payment could send your FICO score down as much as 100 points. Miss more than 1 or default altogether? Good luck ever getting a loan again.

The future can't be predicted. If you thought you couldn't repay the loan, you probably wouldn't be sitting in the bank trying prove you can pay it back. No one ever plans to miss a payment, things just happen. One missed payment could prevent you from obtaining a car loan, a mortgage a HELOC, a credit card, and event the ability to rent an apartment or business location.

With a Merchant Cash Advance, if you close your doors without breaching your contract, there is no recourse. If your business sales drop 75% to inclement weather, a catastrophic event, a sagging economy, or seasonality, there is the luxury of not having to make a set fixed monthly payment. Since the provider is only withholding a fixed percentage of sales, you are only paying back at the speed you are able to generate revenue.

Don't buy into the hype about obtaining a loan 'to build your credit.' That's a sales pitch lenders use to entice you to use their money. One false move in repayment will send your credit score south. You have everything to lose. Want to build your credit score? Use a credit card.

Seizing the opportunity
Have you ever had a limited time offer from a supplier to buy inventory at a substantial discount? Have you ever had the narrow window of opportunity present itself and  you just needed the cash on hand? if you go to your bank, chances are the process is going to take longer than a month to close on a loan agreement and even longer than that to finally receive the funds. The most profitable business opportunities don't make themselves available for too long. Someone else will grab it if you don't. With a Merchant Cash Advance, the cash can be available to you within a week.

Interest Rates
Did your accountant run some figures and try to equate your Merchant Cash Advance into an APR Percentage? Converting a Merchant Cash Advance into an APR is a bogus analysis. APRs require a predetermined timeframe, of which there is none in this case. It also disregards all the potential negative consequences mentioned above. Do some research on the APR % on overdraft costs to your bank account. There are examples that prove costs of up to 8,000%. That sounds fairly ridiculous even thought it is accurate. It is an example of how inappropriate this calculation can be.

If you're a business owner, don't be quick to dismiss it. A Merchant Cash Advance is better than you think. 

New York City Merchant Services is an affiliated service with Sure Payment Solutions, LLC
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