Small business financing comes in many different forms, and one lesser-known option includes merchant cash advances. This financing option can be a bit confusing, as it isn’t a loan in the traditional sense, so paying off a merchant cash advance looks different than paying a loan.
Merchant cash advances are initial lump sums given to you for your business, typically to cover expenses that need to be paid very quickly. They are paid off based on your future revenue, as a portion of the debit or credit card transactions made at your business will go towards a daily payment toward the lender. Thus, your repayments will differ depending on how much money you make in sales, and the overall length of your repayment term will depend on your business’s financial performance. This eliminates much of the pressure that can come from trying to make a specific monthly payment amount during a time when sales may be lower than they were in a previous month.
Unlike traditional loans, merchant cash advances don’t help you build credit because they technically aren’t loans. This also means that business owners with poor credit are more likely to be accepted for merchant cash advances than traditional loans.
Helping people finance their small businesses is what we do here at TB Capital Partners. We are invested in your success and want to help you find the best financing option for you. If you want to make sure you have the resources you need to start your business, call us today to discuss your loan and financing options.