Different Merchants, Same Loan

There are so many different types of merchant businesses; from clothing stores, to hair salons, to gas stations, to auto repair shops, and the list goes on. Although the heads of these businesses may hold varied interests, as they are experts in completely different fields, they all have one significant thing in common. They are business owners who could most likely use a little extra money to put towards their businesses. This is where the merchant loan comes into the picture.

A merchant cash advance is a specific type of merchant loan that utilizes a process called credit card factoring. Some businesses are ineligible to receive merchant cash advances since they do not regularly process credit card sales. But for the lucky business owners who operate merchant businesses, selling retail, wholesale and/or services, a merchant cash advance can make a business better than ever, and become a merchant's best friend.

What is Credit Card Factoring?

Credit card factoring is selling your business' future credit card receivables. By doing this, you are able to get money upfront, to put into your business. This is ideal for merchants, especially those who are ineligible for other traditional types of business loans. Since merchant cash advance lenders are actually buying your future credit card sales, once your account has been funded, the lender will take a small percentage of your daily credit card sales until your merchant cash advance repayment is complete.

Merchant cash advances are particularly safe for merchants due to the way credit card factoring works. Before offering any particular amount of money to a merchant, lenders review the borrower's monthly credit card sales. They will then calculate a sum that (based on the business' monthly credit card sales) can be paid back in a reasonable amount of time.

Some merchants may be wary of dealing with merchant cash advance lenders, due to a fear of being swindled or deceived. But the fact of the matter is, merchant cash advance lenders are putting their money on the line, and they don't want to lose money any more than you do. Therefore, they will not lend an amount of money that they do not feel your business' credit card sales can support. The percentage taken from your daily credit card sales will also be small as lenders want to produce satisfied customers.

Another factor that makes merchant cash advances so compatible for the merchant business is the variableness of the repayments. Since repayment is taken as a percentage of sales, rather than a fixed number, your repayment amounts automatically change along with your credit card sales. If your repayment is set as 15% of your credit card sales, and you make $30,000 in credit card sales in July then $4,500 will go towards your loan repayment for that month. But if for some reason, your August credit card sales only reach $17,000, only $2,550 of that money will go towards your repayment. This is extremely beneficial for merchants as at times, sales can rise and fall without expectation or identifiable reason.

Regardless of the type of merchant business you operate, coming across business financial predicaments is only natural. Instead of letting these occurrences get the best of your business, consider a merchant cash advance, it could be the solution to your merchant problems.

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