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Merchant Cash Advance for Small Business

Merchants, especially small to medium sized ones, can have an abundance of struggles as they get businesses off the ground or look to expand and grow. One of these problems is the need for financing sources.  Often, financing can be hard to come by for a merchant due to extensive paperwork, the time required to receive funding, and required personal guarantees, etc.

If you relate to this problem, a Merchant Cash Advance may work for you. In this article, we will explain the benefits of a Merchant Cash Advance as well as suggest some possible ways to utilize the funding to grow and improve your business.

A Merchant Cash Advance can help by offering a source of financing that is not typically associated with traditional bank loan. A Merchant Cash Advance uses your future credit card processing sales as collateral and purchases those sales from you in advance of your business making the sales. This means that the financing is not based on your personal credit history but your business’s strength, in particular your sales strength.

Because the “collateral” for the financing is your future credit card sales, typically there’s less paperwork than with traditional financing. You will need to provide credit card processing statements and sign some paperwork, but it is usually much less work than obtaining financing from a bank or other lending institution. This leads to a faster funding time, so you can put the money to work for your business without having to wait around for a month or more. Sometimes you can get financing in as little as five days. Typically you won’t have to sign a personal guarantee because your business is securing the financing.

Once your financing is available, you can use the Merchant Cash Advance in many ways. Because the financing is not secured by a physical asset like a car purchase or equipment, but by future sales, the money can be used for nearly anything. You can use some of the advance for cash flow management, to upgrade a POS system, and to upgrade a patio or other outdoor space. 

Here are some other ideas for your Merchant Cash Advance financing:

  • Open a new store.
  • Upgrade store equipment.
  • Upgrade your POS and computer system.
  • Add outdoor space or expand your storefront space.
  • Increase your inventory ahead of a holiday or other seasonal opportunity relevant to your business.
  • Add a robust digital presence to your store.

Once you know what you want to do to grow your business, how do you pay it back? This is another great feature of a Merchant Cash Advance; the payback is flexible to work with your business’s daily operations.  Payments are made to the Merchant Cash Advance company out of your daily credit card processing batches. Therefore, you do have to worry about writing yet another check or budgeting for the Merchant Cash Advance payments. The payment budgets itself.  The payment is a fixed percentage, which means that the payment amount flexes with your business. Unlike a set fixed payment, if you have a day with lower sales, the payment is lower.  When you have a day with higher sales, you make a higher payment toward the balance. This is because the percentage you pay back daily will translate into a higher dollar amount (keep in mind that the percentage is still the same.)

If you borrow money from a traditional lender, you will have a fixed monthly payment that is due whether or not you had a good month or a bad one.  For example, if you must pay a $100 monthly payment for a bank loan, you will have to pay that $100 whether you have a good or bad month. On the other hand, if you typically contribute $100 per month to your Merchant Cash Advance but have a bad month, you may only pay $90. You are not penalized for the lower payment.  Now that is financing that works with your cash flow.

Vantiv Integrated Payments provides Merchant Financing with several types of financing available to help you. Vantiv Integrated Payments also provides proprietary POS Financing to merchants who start a new merchant account with Vantiv Integrated Payments while in the process of buying a new POS. For merchants who are not purchasing a new POS or already process credit cards with Vantiv Integrated Payments, Vantiv Integrated Payments provides financing via Merchant Cash Advance.

*Each of the financing programs contain eligibility and other program specific terms and conditions.

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