Why a merchant cash advance is better than a high-risk business loan
Banks and other business financiers will label a business “high-risk” if it falls under what they classify as risky industries. These range from conventional operations like hotel and catering and electronic dealerships, to highly-scrutinized sectors like drugs and pharmaceuticals, firearms and adult services.
Alternatively, a business owner might have a poor credit record. Consequently, a bank will consider them a high-risk applicant, and either reject their loan request or grant it with additional interests and contingencies.
Business loans have their merits, but high-risk merchants are usually better off with other funding methods. And the number one alternative to a loan these days is a cash advance
Below are a few reasons why you should go for an advance, instead of a high-risk business loan.
- Quick funding
If you’re in need of funds to pay monthly bills or to take advantage of a limited time situation, getting a loan application approved might take an unacceptably long time. The situation can become even more unpleasant if you’re applying for a high-risk business loan.
Acquiring cash advance is much easier than a loan because if you’re working with a renowned provider like First American Merchant, the application will be easy, approval will be fast, and you’ll have cash in your account in as little as 24 hours.
- No personal guarantees or collateral
High-risk loans typically come with a horde of requirements. To reduce the risk involved the bank will want your credit history, business plan, bank records and tax statements. Additionally, you’ll likely need to provide collateral to cover a potential loan default.
A cash advance provider, on the other hand, has little interest in your personal affairs. You’ll only be required to provide proof of steady sales, and if they’re good enough, your application will be passed.
- Promote business growth
Because it’s serviced by individual sales, a cash advance will allow a merchant to concentrate on the business, rather than worry about meeting monthly loan payments.
Additionally, cash advances are better utilized in an enterprise because when a trader uses the funds to increase sales, the advance will essentially be paying itself. For instance, if a trucker business uses an advance to buy a new truck and improve delivery, the additional sales will contribute to paying the advance faster, while growing the business.
High-risk business loans are not only difficult to acquire, but also come with many demands and hefty interest rates.
Through a cash advance, merchants can get the funds they need quickly, with a repayment system that works to boost sales and enhance growth.