A unique benefit to merchant cash advances is that your financial obligations automatically adjusts according to your revenue levels. (With Credibly, this isn’t automatically adjusted, only based upon request after the month in question has ended.) If you have a particularly slow day where you don’t get a lot of customers, the provider of the advance simply collects less money that day. Businesses that typically deal with a large volume of credit card transactions could potentially have their advance paid off very quickly.
However, unlike with a traditional business loan, there is no financial benefit to paying off a merchant cash advance early. Since you agree to pay a set percentage every day, you don’t have the benefit of paying less interest over time like you would with a traditional business loan.
Since merchant cash advances are a type of short-term funding, their rates tend to be higher than business loans with longer terms.
In some cases, business owners who apply for merchant cash advances are required to get new credit card terminals in order to be approved for the advance.