There are many advantages attached to obtaining small business cash advances in order to gain access to instant capital, rather than going through the rigorous method of seeking to obtain a bank loan. Small business cash advances are an increasingly popular way for entrepreneurs to raise capital for meeting a variety of different kinds of business needs. Unlike traditional loans, small business cash advances are not reliant upon assets or collateral, and are often available even when the bank or microlenders have said no to business owners on loans due to poor credit or other disqualifying factors.
The main difference between a bank loan and Small Business Cash Advancesis that a provider is making an investment purchase in your business, not providing a loan. The exchange is between the lump sum of money that is advanced to you as capital to invest in your business and the provider who will be repaid in interest on future sales that are made via credit and debit card transactions.
Because small business cash advances are not loans, they are not subject to the same kinds of requirements that banks and small lenders may have when approached for a loan. Often, assets and equity for collateral are not necessary, and usually the small business owner can use the funds in any way he or she would like – hopefully to reinvest in the business itself in order to increase profit – and not for a summer vacation trip to Majorca, although in many cases the latter would be a perfectly legal and acceptable use of the funds.
Another advantage to procuring small business cash advances over loans is that they are processed far more quickly than loans, which gives you access to the capital that you need precisely when you need it. Moreover, payments to the processing company that has provided the lump sum are flexible in the sense that during a slow part of the year, a merchant continues to pay the same rate of every credit or debit card sale as agreed, and cash flow can be managed without further putting a strain on business finances.
Small business cash advances also present a tremendous advantage to businesses with a poor credit rating that cannot get loans because of this, even if the business or merchant is extremely profitable. Banks tend to look at credit scores and collateral, not present performance. A merchant cash advance, however, turns that dichotomy on its head and gives many businesses an opportunity to expand and flourish when a bank or other lender would not.
