Given the trying times we currently face, it’s not uncommon for small businesses to run into cash flow problems. How can a business owner go about fixing a cash flow problem, aside from making more money? Traditionally, you would apply for a loan with a major bank. However, since the financial crisis of 2008, banks have forgotten about small businesses in favor of larger ones because larger loan opportunities are more profitable. Luckily for smaller businesses, alternative finance options exist. One of the most viable alternative finance options is the merchant cash advance. Not only does this option offer flexibility in regards to repaying the advance, but merchant cash advance requirements are also much less stringent than that of traditional bank loans. 

What is a Merchant Cash Advance?

A merchant cash advance is a lump sum cash advance based on the credit card sales of a business. Applying for a merchant cash advance is typically quick and painless. It’s not uncommon for the full advance to be deposited into a business account within days after an agreement has been reached. 

Merchant cash advance requirements for repayment also offer a degree of flexibility. Each day, an agreed-upon percentage of credit card sales goes directly to paying back the advance until it’s completely paid off. Daily loan repayment amounts are based on your daily credit card revenue. Your daily repayment amounts will vary to match fluctuations in your credit card sales.

Choosing a merchant cash advance to finance business growth is a great option because you are free to choose how and where to spend the money. Whether it’s purchasing in new equipment or investing in a marketing push, you get to grow your business how you see fit. 

Merchant cash advance

Merchant Cash Advance Requirements vs. Bank Loan Requirements

Merchant cash advances and bank loans both serve the same purpose – to provide a lump sum of cash to businesses that need it. However, they are two completely different avenues to obtain the necessary money. Merchant cash advance requirements are not nearly as strict as bank loan requirements.

Banks evaluate and grant loans differently than that of most merchant cash advance providers. Banks will look at the credit history of a business owner, his or her liquid asset, and collateral to determine whether or not that business is a suitable candidate for a bank loan. Applying for a bank loan is a long and drawn-out process, which could further damage an already struggling small business.

Approval rates for merchant cash advances are generally higher than that of bank loans. For a merchant cash advance, credit may impact the amount of money granted for the advance but it isn’t a huge factor in the approval process. Most merchant cash advance providers will require you to have been in business for at least 3 months and will need to look over the deposits you made into your checking account during that time. Credit card sales are a critical part of getting approved for a merchant cash advance. Other important factors also include the type of business, your average daily checking account balance, any overdraft fees, and negative balances.

Another distinction between merchant cash advance requirements and bank loan requirements is the nature of repayment. Merchant cash advances offer more flexibility than bank loans when it comes to paying back the lump sum. 

Bank loans require businesses to repay their loan at the same rate every month, even when business is slow. A sudden decrease in business can cause a business owner to fall months behind on their loan repayment, affecting his or her personal credit. With a merchant cash advance, you pay a previously agreed-upon percentage of your daily credit card sales so it’s impossible to fall behind on payments.

Merchant cash advance financing

Alternative Funding with CFG Merchant Solutions

Maintaining and growing your business is a difficult task even when the financial landscape is somewhat normal If you are a small business that has been recently impacted by the global pandemic, CFG Merchant Solutions may be able to help. 

We offer a variety of alternative finance solutions to businesses who struggle to qualify for traditional loans. All of our finance options, including merchant cash advances, are specifically designed to provide almost immediate access to necessary capital.

Interested in a merchant cash advance? Contact us today to find out if your business qualifies under our merchant cash advance requirements.