4 Tips To Help You Get the Best Merchant Cash Advance Possible
For business owners, there will always come a time when you need money to invest back into your company. While it’s best to rely on your savings, most owners choose to finance any improvements or growth projects with traditional business loans. Those loans work, but they’re hard to qualify for unless you have a long history of profits and a great credit score. A merchant cash advance (MCA) is a wonderful alternative that allows you to avoid the pitfalls of traditional business loans. Here are a few tips to help you use them properly.
1. Set Clear Goals
Before you start applying for any type of financing, make sure you know how you’ll use the money. If you have certain projects in mind, outline what you’ll have to do to bring your vision to life and estimate the total costs for your improvements. This will help you better understand how much you’ll need to borrow in the first place. Once you have a number in mind, you’ll be better prepared to start looking for financing.
2. Gather Your Documents Now
Before you start applying for advances, you’ll need to make sure you have the right documents on-hand. Luckily, the MCA application process is much easier and faster than traditional loan applications. Instead of a detailed business history, all you need to give the lender is your credit card revenue statements, bank statements and a list of your regular expenses. This will give the lender a clear idea of your financial situation and helps them decide how much to lend you in the first place. Compiling those documents takes time so make sure to start early rather than waiting until you’ve already initiated an application.
3. Shop Around
Just because you’re applying for an MCA instead of a traditional business loan doesn’t mean you should choose the first provider you find. You still need to shop around and get quotes from different lenders. Read the terms each lender offers you and make sure you understand how you’ll repay the advance as well as the cost of any additional fees they may charge. Compare the quotes in detail and choose the lender that you’re most comfortable working with.
4. Make Sure You Can Make the Payments
When you use a merchant cash advance to finance your business, you repay the advance with a percentage of your future sales. That percentage will vary from lender to lender. Before you accept the advance, make sure you can afford to pay that percentage. Otherwise, you risk damaging your business’s credit score.
Keep these tips in mind and you’ll be able to get the most out of your merchant cash advance every time.