What is a Merchant Loan?

From an eZine article by Christopher Ronk

In a nutshell; a merchant loan is when a factor (an investor) purchases a portion of your businesses future credit card sales at a discounted rate. The payback is done automatically through your credit card processor using a percentage of your daily credit card sales, usually within 6-9 months.

Other terms used for merchant loans include; Credit Card Factoring, Business Cash Advance, Merchant Cash Advance or Unsecured Business Loan.

The business of providing merchant loans is relatively new. The first provider opened their doors less than ten years from when this article was written. The industry has been growing exponentially ever since. One word of warning; ask lots of questions and read everything very carefully before you sign anything. Most providers are very reputable and think in terms of building relationships. However, as in most businesses; there are always a few bad eggs.

How do you qualify for a merchant loan?

Getting a merchant loan is relatively simple when you compare it to a bank loan. For most providers, all you need to qualify is;

• You must be in business for at least 6 months.
• You must process Visa and MasterCard transactions.
• You must process at least $2,500 a month in Visa MasterCard sales.

The application process

• In order to begin the application process, most providers ask that you fill out a simple 2 or 3 page application form.
• Along with the application form, you will need to provide the previous 4-6 months of your merchant statements.
• After you submit the required information, it generally takes about 24-48 hours for approval.
• Once approved, you will be given a quote with an up-to-the-penny outline of your payment terms.
• I everything is agreeable, you sign the paperwork and the money is deposited into your bank account in about a week.

It is important to note that the entire process takes less than ten days as opposed to the several weeks it takes for a bank loan to go through.

It is also important to note that rather that giving you a fixed payback schedule with the same payment due each month; a merchant loan payback is based upon a percentage of your daily credit card sales. It is significant because on days when your business is slow; you pay back less. This flexible payback schedule takes some of the stress off your business when things slow down. This helps to promote your businesses success. This way; everybody comes out on top.

What are the disadvantages of a merchant loan?

A business loan has one clear advantage; the cost. Most businesses apply for a merchant cash advance because they either need the money quickly or they have been turned down by the bank. Because a merchant loan is unsecured, it carries more risk. Because there is more risk, it is more expensive.

What are the advantages of a merchant loan?

A merchant cash advance has many advantages over a traditional bank loan. These advantages include;

• No Collateral
• Poor credit OK
• Adjustable payback
• Quick funding
• Easy application process
• No UCC-1 filing

Working Capital for restaurants Learn how a merchant loan can help your restaurant succeed.		Merchant Loans for bad credit How can you get working capital even if you have les than perfect credit.

How to get started on a working capital merchant loan

To qualify for a business cash advance (merchant loan) you will need the following;

• You must be in business for at least 4 months.
• Accept MasterCard and Visa.
• Process a minimum of $2,500 a month in credit card sales.

If you meet these qualifications, simply fill out the form on the left. It takes about 24 hours for approval and 7 days for the working capital to be deposited directly into your business bank account.

Working capital for small business

We have helped thousands of businesses get the working capital loans they needed to maintain or grow. Many of these businesses had very limited options and without our support, may very well have gone under.

Here is a brief summary of some of the businesses that have trusted us for their working capital funding.

Instant Merchant Loan Calculator Instantly discover how much we can advance your business Monthly credit cards sales: Monthly gross sales: