Merchant Cash Advance That's Like A Line Of Credit In order to help Merchants better understand the potential with a Merchant Cash Advance, and how it can be used similarly to a line of credit, it's important to know what the renewal process is. Many times I am asked by Merchants about obtaining a line of credit, and they are available, but only to those with 700+ FICO scores in most cases. So what about the majority of business owners who do not have the 700 credit score for a line of credit, how can they get something similar to a line of credit with lets say a 500 credit score. The answer is a revolving Merchant Cash Advance. Like I mentioned earlier, the renewal option is the key to making a merchant cash advance become a revolving merchant cash advance. Most of the larger lenders offer merchants the opportunity to renew once 50% of the advance is paid. So you might ask, why would I want to renew my advance after it's 50% paid? Because many times a merchant puts in a request, let's say for $50,000, but the lender is only willing to give $25,000, with the option to renew once the advance is 50% paid. So why is this merchant only able to get $25,000 instead of the $50,000 he requested? It is because of a formula that most lenders use to determine the advance amount. A lender looks at the last 3 months of business bank statements, and then takes an average of the amount deposited each month for the last 3 months. Once that average is determined, let's say it's $30,000, they will advance up to 1.5 times that amount, in this example the max advance would be $45,000. It is important for merchants to know this formula before they request an advance amount, because it will fall into those guidelines every time. Once you know this, then it will take away wondering why the advance is not as much as you requested. This is where the need for the revolving merchant cash advance comes into play. A merchant may need $50,000 to accomplish their goals, but what if the deposits are $20,000 per month on average? That means the max advance will be $30,000, which is $20,000 less than needed. This is where you have to adjust the time frame on your goals, and realize that it is going to take a little longer that expected. So you take the $30,000 advance and get a good start on accomplishing your goal, and let's say the payback time frame is 8 months, and you have the option to renew once 50% of the advance is paid, which would be 4 months down the road. After 4 months of paying your advance as agreed, you now have a good relationship established with the lender, and can talk with them about options for renewal. In many cases they will advance an amount up to double what the first advance was, giving you access at this point to more money than you originally needed, but you can use only the portion that you need at that time, making it much like a line of credit. 3 Benefits Of A Revolving Merchant Cash Advance 
Now that you have the knowledge about how the renewal process works, you may have questions about what a merchant cash advance is and how it works. All of your questions can be answered in detail by just continuing to read through the merchant cash advance tutorials provided in our blog. A great article that explains what a merchant cash advance is can be found HERE. At Small Business Capital US, we help business owners every day with the working capital they need to grow and expand their business. We'll get you the cash you need, and we don't even ask how you're going to use it. Don't let your credit stop you from getting the merchant cash assistance you need for your business. Call us today at 800-681-0834 and speak to one of our friendly, knowledgeable team members who will guide you through our simple 3 step process, or you can click on the "Get Started Here" button below and provide us with a little bit of information on our secure web application. 
0 Comments
Leave a Reply. |
RSS Feed