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Categories: Finance

Getting Merchant Cash Advance Is Easy But it is Difficult to Repay

A merchant cash advance is known to be short-term fund advance against business’ receivables. To pay it back a fixed percentage or debit is taken off directly each sale weekly or daily.  This is a whole new industry that is flourishing since the bank lending criteria has become tight after the Great Recession. As a matter of fact, with merchant cash advance loans even small businesses can qualify for it.

Getting money from merchant lenders Canada at times is genuinely necessary. However, it is necessary to know when to pull the trigger.  It is better to use it as a stopgap when there is an increase in the revenue.

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When Do You Need Merchant Cash Advance?

There are several instances when a small business owner will require capital for creating growth such as new florist bought some last minute arrangement for a wedding event or a dentist doctor who has to buy equipment.

These are examples of where an increase in the income will be anticipated. Businesses that are good and growing amid unpredicted cash flow cannot fund the capital outlay without the working capital.  When the business requires the funds for a short-term basis for generating for revenue, it makes sense to get in touch with merchant lenders Canada for the business growth.

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With the merchant cash advance, you will be able to enjoy a lot of benefits. It is a five-minute application and there is no paperwork. However, the rule of the thumb is that until you use it to generate new income stream which pays back the advance, it will lead to bigger problems than it can solve. In simple words, you should not use this instrument for filling the hole which creates even a bigger one.

Questions You Need to Ask Before Deciding Whether to Take One or Not

Before you decide whether you want to take the help of merchant lenders Canada, you have to ask yourself these questions.

  • Is this going to help me win the business?
  • Will it help the business to grow?
  • Will it help to buy new equipment which generates cash?
  • Do you need the money right away?

And in terms of the ability to pay it back:

  • Can you generate the sales you need so that you will not feel when a fixed sum deducted of the credit card swipe.
  • Can you pay the bills if you lose a percentage on top of the sales?
  • How long will you be able to go without this fixed sum being deducted the money you are making?

The price paid to the merchant lenders Canada is significant.  The cost of funds is going to be anything from 20-40 percent on the advance on the basis of the credit score and various other risk factors. Nonetheless, this is offset by the fact that the instrument offers some tangible and real advantages to the small business. The process of application is pretty simple and the funding decisions of the merchant lenders Canada are taken pretty quickly.

You will be able to get funded at a wide range of credit scores that starts as low as 500, if the mitigating factors are checked. Additionally, payback is also incremental. Hence, the cost of funds is not going to be felt.  Read more about financial news here!