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Of all the American businesses, a staggering 99 percent accounts for small businesses. If you’re finding this data alone mind-boggling, then you will be amazed to know that nearly half of the nation’s workers are employed in these small businesses. In spite of these impressive stats, the reality is quite different. Almost all small American businesses face major cash flow issues at some point in time.
In a case study published by JPMorgan Chase study, it is reported that the majority of small businesses on average have the funds to manage 27 days of outflows. Among the businesses that took part in this survey, only the top 25 percent have a cash buffer that is sufficient enough for them to sustain for at least two months. In short, cash reserve which is vital for anything you want to do from capitalizing on growth opportunities to firefight unforeseen catastrophes, the reserve is scarce in most cases.
Certainly not because the small business owners are irresponsible with their funds! A cash reserve is scant in most cases because small businesses have tight profit margins, unlike big enterprises. With all these eye-opening statistics we can only say that cash is king. But the million-dollar question is where do you get it? Well, a merchant cash advance is certainly an option for small businesses like yours.
It’s a quick and easy solution for all your cash crunches. You can borrow loan amounts up to $200,000 from funding companies to meet the immediate capital requirement for your business. The best thing about the merchant cash advance is, that it is quick. In a lightning speed of just 24 hours, you can have the money in your hands! It also lets you repay the loan in a short term lasting a couple of years only.
First thing first. It is quick; hence you don’t need to wait for too long to get your loan application approved. Unlike traditional lenders, here the pay-out is fast. When the funding requirement is fast and you don’t have too many options in hand, an MCA is an easy way out for you.
The working principle of an MCA is simple. It lets you leverage your future earnings so that you have access to quick capital. Once you have the funds with you, you can repay it by a percentage of your daily credit card deposits withheld for the lender. Worried about your credit report? Don’t be! Because since this is considered a sales transaction and not a traditional loan, it stays off your credit report. Now, this is something amazing, isn’t it?
Businesses that are stuck in a critical spot can easily get out of it with this. Whether you need to repay a creditor or buy new equipment immediately, you will find that an MCA is handy. It can also help bolster your business when you see a growth opportunity. However, these are just some sample scenarios and are not limited only to these. A merchant cash advance is versatile and can be used by any small business owner for any business purpose that requires immediate cash flow.
Unlike traditional loans where you need to go through heaps of paperwork, credit pulls and other formalities, an MCA is quick and simple. That is so because whether you’re eligible for it is determined mostly by your business’s performance and not just your past financial report and credit scores.
However, keep your bank statements from the past four to six months handy, as the lender may want to check them. Remember, a credit card transaction is an important deciding factor. If you have got more than $2,500 in monthly credit card transactions, you have a good chance of approval even if you have not been in business for a long time. The idea is to ensure that you can pay off the money. Since this is not a very grueling approval process, most businesses get approvals quickly as compared with a traditional business loan.