If you are looking for an alternative to traditional bank loans, business cash advances can be an ideal choice, as they are based on the future revenue of your business. They come in a number of different forms and are sometimes referred to as:
- Revenue-Based Financing
- Revenue Loan
- Turnover Loan
- Merchant Cash Advance
Cash advances offer the ability to borrow money from future sales at a discounted rate to the lender. Essentially, you won’t have to face an outstanding loan amount in the same way as with a traditional bank loan. For this reason, businesses with limited funds or who are unsure of their potential income over the next few months could benefit from business cash advances, as the repayments are often associated with your revenue as opposed to a fixed payment.
So, how exactly does this all work?
What Are Merchant Cash Advances?
A merchant cash advance is probably the most popular type of advance, not least because it is very easy to track; the lender and your payment provider work together to ensure that they are directly involved in each transaction. This type of business cash advance is aimed at businesses that take payments using a card machine.
Many business owners prefer this type of business cash advance as repayments don’t hit the company as hard. The advance is repaid automatically and with online logins being readily available to use for many businesses that use merchant cash advances, you can keep an eye on your status throughout the entire process. However, this service can vary from lender to lender; out of our 200 different lenders on our panel, you will find many that offer you an online login due to convenience for both the lender and the borrower, but some may not.
As a business owner, you’ll want to keep an eye on the status of your business cash advance, but a merchant advance doesn’t require much oversight. With there not being a monthly repayment, rest assured that every transaction made for your business will be paying the debt automatically.
Who Is A Business Cash Advance For?
A business cash advance is ideal for businesses that:
- Have been trading for more than 4 months
- Take more than £2,500 a month in either credit or debit card payments
It’s also important to note that you will not need a credit score for a business cash advance due to the lack of monthly repayments, so those with poor or limited credit history can still apply.
Are Business Cash Advances Safe?
Business cash advances are incredibly safe. With there being no chance of missed repayments, you can run your business knowing that your payments are on time, and you will always be able to keep on top of them. If your business’s cash flow isn’t as strong during some months, you can rest assured that you can still make your repayments, as they will be relative to your income rather than a set price.
What’s more, because the loan is considered unsecured, your home, any of your personal property and the vehicles you own will never be at risk of repossession as there is no need for collateral. Your assets remain yours and won’t be required when applying.
What Can A Business Cash Advance Be Used For?
Business Cash Advances have no restrictions attached as to how you can use your funds. Generally, they can provide a useful cash injection when business is slow, but can also be used to fund expansions or other business activity when it’s needed most. You can use your loan as you wish and rest assured that there is no pressure to stick to rules or limitations on how it’s spent.
Are ‘Business Cash Advances’ A Good Financial Alternative?
As a business owner, the thought of being in debt and having the dreaded APR to pay back can make you steer in the opposite direction of typical loans. However, business cash advances don’t actually have APR, making it a great alternative for those fearful of the annual percentage of interest. With businesses only having to pay the set amount they agreed to at the beginning of the ‘loan’, in addition to not having to face any imminent penalties if they fail to make a payment, it shows just how great a financial alternative option a business cash advance can really be.
As business cash advances are also flexible, it is good for businesses that are looking to invest over a short period of time, whether it’s for making improvements to the company or buying stock in advance. In fact, a cash advance loan can make or break a business in some cases.
If you are a business owner and you would like to find out more information regarding business cash advances, contact our friendly team and we will answer any questions you may have, today.