If you’ve ever found your business in a financial bind, you know how stressful it can be. On top of the anxiety that’s produced from the initial realization, there’s the concern for your business, yourself, your employees, and so much more that follows. When you add to that the overwhelming number of options for business financing, the situation can easily become one of the worst in your life. If the situation you’re in demands that you get an infusion of cash quickly, and don’t have the credit score or financial history to be approved for a loan, a merchant cash advance might be the solution you’ve been looking for. 

Why It’s Unique

As with any other type of financing, you’ll receive an agreed-upon sum, in this case, in the form of a deposit into your account. You’ll also end up paying the lender back more than you’ve borrowed, usually around 20% to 40% of the sum. So, if you borrow $10,000, you can expect to repay anywhere between $12,000 and $14,000. The thing that sets a merchant cash advance apart from other kinds of business financing is the way that it’s repaid. Unlike other financing options, you repay these funds from your business’s credit card sales. During the negotiation, what’s called a holdback will be determined, which is the percentage of your daily credit card sales that the lender will withhold as payment. So, if you have a great sales day, you’ll be paying off more than you would be on a not-so-great sales day, but the same percentage of your sales is going towards your debt on both days. Typically that holdback will be anywhere between 10% and 20%, though it can vary. 

Why It Can Help

One of the best things about this type of financing is that it’s based on your credit card sales. If your credit score is low, or your business doesn’t have a long financial history, you can still be eligible for funding as long as you have a record of good credit card sales. The approval process is also pretty quick, so you can expect to get your funds promptly. And let’s not forget, the fact that your payments automatically are withdrawn means less money-management work for you. 

As long as you understand how it works, and what its advantages and shortcomings are, you can make this kind of financing work for you. With the right thought process and attitude, a merchant cash advance can be just what you’re looking for.