Merchant cash advances (MCAs) are a growing alternative to traditional bank loans. Although they are not loans, they provide cash that businesses need in exchange for a percentage of future receipts from the business. The advantages of merchant cash advances for businesses are numerous.
The Upside to MCAs
For one thing, you don't have to spend hours gathering up a bunch of financial documents and statements in order to apply for a merchant cash advance. Most small business owners spend long hours making their business work and keeping it operating. Who has time to spend finding last year's tax return, financial statements, and letters of reference to satisfy a bank's strict requirements?
Another great thing about MCAs is that they don't rely stricly on your credit score or rely on you to furnish collateral in order to qualify. Business credit ratings are tricky - they rely on lots of different information, and if you haven't used credit in the business's name before, you may not have a good rating for that reason alone. And other than their inventory, most businesses don't have collateral with which to secure a loan either.
While a bank seeks to give only large loans with lengthy repayment terms, MCA providers see the value in providing even smaller amounts of cash, with repayment being within a year in most cases. This flexibility can help small business owners fund an equipment upgrade or expand to a larger space without paying for it for the next 10 to 20 years.
The Biggest Advantage of All
Any one of these aspects of a merchant cash advance makes it a good choice for many small businesses, even those who might qualify for a bank loan. But what is the biggest advantage of an MCA?
You can get your money in as little as a few days to just one week
While bank loans can take weeks or even months to decide whether to give you money, even after you've spent a significant amount of time applying, most MCAs are disbursed within a week of application.
Why is this kind of speed important? Many small business owners discover that they need cash urgently and quickly as a result of events like sudden equipment failure, an expansion or merger opportunity, or a need for additional inventory. In some cases, every day they don't have the cash they need, can mean losing money or having to be shut down. Not being able to get cash fast can even mean losing out on an opportunity that can help the business grow and be more successful.
When speed is absolutely essential, a merchant cash advance can make all the difference for a small business in need of cash. Quikstone Capital Solutions provides MCAs to businesses that can benefit from a cash infusion and can't afford to wait for a bank.
