Businesses flourish on cash flow. Without a regular injection of cash, it’s tough to keep the doors open. So what do you do when you need cash for some tasks and don’t have it at hand? Well, you can apply for a merchant cash advance.
A merchant cash advance gives your business an influx of cash when you need it. But, the amount you receive from lenders depends on your previous sales record. Therefore, you need to provide the lender with all the relevant documentation.
After receiving the advance, payment is through a percentage of your sales, depending on the volume. If you keep it on track and manage it well, it can be a great business tool.
Below are the three steps that’ll get you a merchant cash advance for your business.
How to Get a Merchant Cash Advance in Three Steps
Step One: Search for Cash Advance Providers
Merchant Cash Advance providers are in plenty of locations providing quick business loans. So before you make a final decision, visit a few and learn more about their terms and conditions. Such research can be an eye-opener and get you a better deal benefiting your business.
One tip is to go in with an open mind when visiting providers and ask as many questions as you want. You can even prepare a question sheet since this is a crucial business task. The answers you get can help you when trying to determine the cost of the advance.
Next, consider the factor rate. The factor rate determines the percentage of all sales paid through credit cards paying the advance. By doing thorough research, you avoid wasting time with an application when you don’t meet the provider’s sales percentage.
Lastly, ensure your current credit card processor has a working relationship with the provider. If not, you need to change if you want the merchant cash advance to go through. Providers only approve applications that use processors they know.
Step Two: Apply
Once you pick out the right merchant cash advance provider and get the suitable processor, send in your application. The good news is if you meet all the requirements, the processing is much faster than loans from banks. Just be sure to have all your sales records and other documents in order.
These documents will give the provider all the financial information they need to know about your business. The application must include all information on credit card sales, total revenue the company generates, and future revenue projections.
Additionally, the provider requires information about your business structure and its history. The faster you meet all these requirements, the faster you get the advance to inject into your business.
Step Three: Read through the Contract
Every merchant cash advance provider must present you with a contract of the agreement you’re making. The contract contains crucial information about the sales percentage that goes into paying the advance. Before you accept any of it, take time to review the agreement.
Remember, every contract involving your business can affect your future. So be sure you understand the terms and conditions of the provider before accepting the advance. Truthfully, even new companies can get an advance. However, taking the contract to your lawyer for review is essential.
Later, you can head back to the provider to discuss any details you don’t find appealing. If there’s room to change, negotiate. If not, you need to look for another one with favorable terms that won’t affect your business. Only then do you sign the contract and receive the advance.
A merchant cash advance is an excellent source of cash for your business. Perhaps you want to bring in some stock or add equipment. Applying for an advance is an easy process provided you meet the requirements of the provider.
Using the three steps listed above, you can find the right provider who works with your processor. If not, get a new credit card processor. After that, apply for the advance and send in all the necessary financial and business information.
Lastly, read the contract and even consult your lawyer. If you find the terms and conditions of the advance favorable, you can sign the dotted line and receive the advance.
