Frequently Asked Questions About Fast Cash Advance Solutions


Jeffrey Bumbales

If a traditional small business loan can’t secure the funding amount, repayment terms or interest rate you want, don’t fret. Businesses that accept credit card payments may be able to receive the necessary funding through a business cash advance. This option is a relatively new and less-understood one, however, so you’re probably wondering just what this type of agreement is and how your business can profit by it. Here are some frequently asked questions (and answers) on the subject to clear things up.

Question: How does a business cash advance work?

The most fundamental thing to understand about a business cash advance, also known as a merchant cash advance, is that it doesn’t work like a loan. Bloomberg Business describes it quite accurately as the “purchase and sale of future income.” The provider simply hands you the lump sum you applied for and then takes a set percentage of your ongoing monthly credit card revenue, which means that the repayments scale up on good months and down on not-so-good months. Most business cash advances are set up to be repaid in full within 12 months.

Question: What are the advantages over traditional loans?

Business cash advances have several things going for them that may make them more desirable under certain circumstances than traditional loans. For example, a commercial loan through a banking institution can take a month or more to approve and fund — not the ideal scenario when you’re in a serious financial bind. By contrast, business cash advances can take as little as 24 to 48 hours from application to approval. You don’t have to worry about coming up with the money for a fixed payment each month, either, because the payment is extracted from your future income. Best of all for some business owners, a business cash advance isn’t tied to credit history, length of time in business, and other factors that often make a small business ineligible for a traditional loan.

Question: Who is most likely to benefit from a business fast cash advance?

Small businesses that are either too new to show an extended financial history or too troubled with credit issues to qualify for a traditional bank loan are often good candidates for a business cash advance. The best candidates are companies that move large volumes of credit-card purchases, such as those in the retail, food, and service industries. If you prefer to borrow a smaller amount over a relatively short term, instead of taking out hundreds of thousands of dollars over a 5-to-10-year period, then a business cash advance can come through when traditional banks cannot. Business cash advances also make sense if your revenue fluctuates too dramatically to make a fixed monthly payment amount desirable.

Question: When might a different option be a better choice?

Obviously, if you don’t do any business volume through credit cards you won’t be able to make use of a merchant cash advance. Small business owners who insist on the lowest possible interest rate (and are able to get it) will want to explore traditional loan options instead. You may also decide that you need more funding than a typical business cash advance can provide, even if it means paying that amount back over many years.

Now that you have some answers to your questions, you’re in a better position to decide whether to pursue a small business cash advance. If you believe that this form of funding is a sensible choice for your business needs, all you have to do is fill out our pre-qualification form.