Merchant Cash Advance Q & A
From the ezine article by Gaston Castro.
Q: Am I eligible for a merchant cash advance?
A: Unlike most bank loans, there are few requirements for merchant cash advance eligibility. Most merchant cash advance lenders have similar requirements. Typically, an applicant who has owned his/her business for at least four months can receive a merchant cash advance if that business processes a minimum of $2,500 each month. Additional requirements include; a business must have at least one year remaining on its lease, and the owner must not have any unresolved bankruptcies.
Q: How much money can I get?
A: Your business's monthly credit card sales are the most important factor when it comes to determining how much money you can receive. Typically, you can receive a loan of up to 30 percent more than your average monthly credit card sales. This is because lenders want to ensure that your business can support the payback. Merchant cash advances are meant to help your business, not hurt it, and lending a small business owner more than his/her business can afford to repay can be detrimental to both the borrower and the lender. Most cash advance lenders will provide loans from $5,000 to $500,000.
Q: How does the repayment process work?
A: The merchant cash advance boasts one of the most unique and specially designed repayment processes of any type of loan. Your merchant cash advance repayments are automatically deducted from your business's credit card sales. When you discuss the terms of your merchant cash advance with a funding specialist, he/she will tell you what percentage of your business's credit card sales will go toward your repayment. This percentage never changes, allowing the actual amount of your payments to change based on your business's sales. For example, if 20 percent of your business's daily credit card sales are going toward your merchant cash advance repayment, and on Monday you process $2,500 in credit card sales, $500 of that money will go toward your repayment. But if on Tuesday, you only process $1,000 in credit card sales, only $200 will go toward your repayment for that day. This repayment process is designed to allow you to get the most out of your merchant cash advance.
Q: What if I still need more money later on?
A: Good news. You can get more money! In fact, you don't even have to finish repaying your merchant cash advance before you can get another one. Once you've repaid at least 60 percent of your merchant cash advance, most lenders will qualify you for renewal. (But here's the trick the more of your advance that is paid off, the more money you can get in your renewal). The second time around (and every other time after that), you can get your money much faster, and with less paperwork.
Q: How long does it take?
A: your merchant cash advance can be approved in as little as 48 hours. After approval, it can take as little as 10 business days for your account to be funded.
Q: How do I get the money?
A: After approval, you supply the lender with a voided check and the money is funded into the bank account of your choice.
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