You will see that there is a lot of growth potential in many industries.
Merchant financing is the key to quickly obtaining large sums of money. Merchant financing is a great way to increase your business’s sales and revenue. It allows you to purchase inventory on credit in the same manner as big retailers like Amazon and Sears.
What’s Merchant Financing?
This type of financing works on the basis that it is not necessary to receive payment upfront for a sale. With no risk or out-of-pocket expense, you can accept monthly payments directly from customers’ accounts. You can accept payments for your product or services through your website, cell phone or email address.
Although your customers might not know you accept monthly payments, there are many benefits – including higher sales volume, increased working capital, and tax savings. Merchant financing comes in many forms (see below “What you need to qualify for merchant financing”).
- Working Capital Loans
You can borrow against future credit card sales revenues to get a working capital loan. Fixed monthly payments are made at high interest rates. However, this deal typically offers the lowest rates. However, the downside to this deal is that it must be obtained from outside sources such as banks or private lenders. This means that there will be additional paperwork, processing fees, and application processes.
- Merchant Cash Advance:
Merchant cash advances also use future credit card sales as collateral. However, you don’t need to wait to get the funds. They are directly deposited into your bank account at your credit card transactions. You can receive funds in 24 hours, without the need to fill out paperwork. However, the downside to short-term loans of this type is that they can be very expensive compared with other types of loans and lines of credit.
- Conversion of a loan:
A loan conversion is a good option if you have slow-paying customers. This type of financing allows you to convert unpaid invoices into low-interest loans. These funds have higher interest rates than what you’d get on a credit card advance or merchant cash loan, but your new lender will offer some relief for clients who are unable to pay immediately.
What are the requirements to qualify for merchant financing?
There are many factors that affect how much money and what interest you can borrow when applying for merchant finance.
- Application Fee
Usually, you will need to pay an application fee before your request is reviewed. This fee is used to cover processing costs as well as verifying the information you have provided online (e.g., income or time spent in business).
- Collateral:
Before making a decision, the lender will need to review your credit reports. This is why it’s important to obtain your FICO score in advance (see “How Your credit score is calculated” below). It will allow you to be better prepared and more in control of the situation.
- Credit history:
This is where your FICO score can be very useful. It’s one of many ways a lender or merchant cash advance company can quickly get a sense of how responsible you are when it comes to debt. You will likely be denied if you don’t have a credit history, are slow paying, have declared bankruptcy, or defaulted on loans.
- Time is a valuable resource in business:
Lenders want to see proof that your business has been in existence for at least one calendar year, and that your annual revenue is at least $15,000.
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Where can you find merchant cash advances?
A growing number of merchant loan lenders are available and willing to do business with your company. It is important to find a lender that offers multiple options, as mentioned above. Progressive Business Capital offers merchant cash advances, small business loans, fixed-rate loans, invoice factoring loans, and line of credit. A company that offers options will give you the best choice for your business.
You should also look at reviews from actual customers when choosing a company to do business with. This will let you know that the company is qualified and can offer the best rates.
You can contact us [email protected] if you are interested in a merchant cash advance or any other funding that will help your business grow.
We have a friendly and qualified staff that will help you understand all the options, as well as provide the best customer service.
