Some businesses are in a risk on their cash. There are those that are comparing and contrasting on all the financial options. You can in fact just go to the bank and apply for traditional loans, but you should never limit yourself to only that option. Merchant cash advance or MCA are in fact good options for a business that needs some extra money. Below are some comparisons between an MCA and regular bank loans.
Approvals are Easier
When you have a business credit history is not that good, you may have problems in gaining an approval for traditional bank loans. This is because banks have strict guidelines and they dictate who they could lend some money to.
MCAs actually are a lot easier when it comes to getting approvals than that of regular loans. As long as the business is accepting debit and credit card payments, you will likely get approved for MCA. This in fact is because through an MCA, you could then pay a portion of the credit card sales and debt to the loan automatically. The lender will get an assurance that the chances of you not repaying the loan is low.
If you have obtained a loan from the bank before, you know certainly that an amount will be due month after month on a certain date. If you will not follow from that arrangement, you will be hit with heavy fees.
Through the MCA, the amount that you pay on every month is going to be based on your debt and credit card sales of your business. When your business is able to perform well, you can then pay more. When time is not so good, you then will pay less. The loan payment will then be staying on your budget.
Knows What you Expect
If you are going to get a bank loan, you could end up worried on the APRs and also on the final payoff amounts and you may end up pressured in paying the loan as soon as you are able to save on interest.
Complicated things like these are not present with MCAs. Once you get an MCA, you will then know on what’s your final payoff amount. There are however no advantages when it comes to paying the loan in advance.
Banks loans may possibly need a collateral through the form of your business or a personal property. Failing to make the payments for the loan could result to a big loss. MCA on the other hand are unsecured loans, which will help protect to avoid losing some of your precious property.
Though every business situation is one that’s different, a merchant cash advance should be your first consideration.