If your small business needs quick access to cash, merchant cash advance loans can be an attractive option. Funding is generally quick, eligibility requirements aren’t particularly stringent and you don’t have to worry about collateral.
But a merchant cash advance can easily make matters worse, and if you can’t repay, it could put you in serious financial and legal trouble.
Before you consider using a merchant cash advance for your business, it’s important to know what you’re getting yourself into and how to protect yourself and your business.
A merchant cash advance loan isn’t technically a loan. Rather, it’s an alternative form of financing, in which you receive an upfront payment in exchange for a portion of your future sales.
Historically, merchant cash advances have worked only for small businesses with revenue that comes primarily from debit and credit card sales. But now, just about any business can get one.
Repayment terms typically range from three to 12 months, but some providers may offer longer terms. There are two ways you can repay a cash advance