There are different types of cash funding options. However, not all options are created equal. Fast Capital 360 recommends caution in applying for certain ones, such as Merchant Cash Advances. The most common type of business cash advance is the Merchant Cash Advances (MCA). A business cash advance is speedy and not credit dependent. Sounds good? Maybe. Here’s how they work:
When the unexpected happens in a small business, the businesses cash flow can become strained. When the unexpected and the need for cash collide, it may be time to consider a business cash advance.
A business cash advance is an alternative unsecured cash advance. New businesses, bad credit, small funding requests all may prevent a business from obtaining traditional financing options. FAST CAPITAL 360 can help small business owners receive the capital they need in spite of these situations.
A business cash advance is very different from a business loan, as table 1 demonstrates:
Business Cash Advances v. Business Loans
|Extensive Paperwork||Fixed Repayment Schedule||Requirement of Collateral||Payback Requirement|
|Business Cash Advance||No||No||No||Yes|
For example, you are not fixed to a repayment schedule and do not require collateral with a business cash advance. Business loans require extensive paperwork: the unsecured business cash advance does not. Since a business cash advance is not credit dependent and can be approved quickly, funding can be available in days as opposed weeks or months. This type of funding is typically not offered through a traditional bank. However, the cost of these types of funds can be high since the risk to the lender is great.
If you are considering this route, you need to be sure the cost of the capital is not outweighed by increased revenue or avoiding a business issue. The most common type of business cash advance is the merchant cash advance, which our company has reservations about.
Cash advance style loans have become increasingly popular among business owners. Some, however, stand above the rest. We, at Fast Capital 360, strive to be the best. Ranking in the top 10 on Trustpilot, we pride ourselves with stellar service and knowledge and serve all 50 states.
What sets us apart?
Here are accolades from just a couple of our customers:
This company I would recommend to anyone and everyone I know. We have tried several advance funding companies so far. FAST CAPITAL is the absolute best out there. they are FAST, THOROUGH, and PROFESSIONAL. No lies, no misleading information. They really care about helping struggling businesses with financial needs. My husband and I own a RESTAURANT/LOUNGE. We have been through some rough roads but with the help of Fast Capital, we have made it through the experience. Customer service is so great; we are using them again to finance another project for us.
Fast Capital was very thorough and very efficient getting my company the money we needed when we were in a high growth curve. Highly recommend them for funding needs.
How Merchant Cash Advances Work?
While these types of funding options are convenient, they often carry high interest rates and fees. They may also require that you install a new credit card processing and point of sale (POS) system. There are some other disadvantages:
Limitations of Merchant Cash Advances
MCAs are an expensive solution– These products can be more expensive than other funding products. Typically, you can pay anywhere from 9 percent to 50 percent over the amount of your initial funding.
MCAs are short-term solutions – These cash advances are made anywhere from three to fifteen months. They are a short term Funding for a short-term need. You need to consider if this funding will help you generate enough revenue to repay the initial financing (plus interest).
MCAs may not be the right solution – If they are not used correctly, MCAs might actually add to your cash-flow problem.
MCAs can be a risky solution – Many things in business are risky. But one of the riskiest premises for some businesses is selling future sales. This is what you are doing with an MCA. You can’t predict the future: your sales could go through the roof. Or they could drop precipitously. While risk applies to any type of funding or financing product, the concern with MCAs is that the cost of obtaining them is high and the repayment period is short.
For more information on why Fast Capital 360 is the best choice for merchant cash advances, contact us today!