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Information about merchant cash advance for a business owner

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Funding plays the most important role in every business. You always required funds in every case, if you want to start a business, extend the business and promote the business. In Canada, people running small scale business usually get stuck in extending their business just because of lack of funds. Merchant cash advance company Canada helps those new entrepreneurs.  

What is Merchant cash advance and how does it help?

Merchant cash advance is the process in which an entrepreneur gets funds against compromising some part of revenue of their business. Their criteria are very different than other bank’s proceedings. They evaluate all aspects of your credits regarding your business to check that your business is eligible to pay back the money or not. Interest rates of merchant cash advance are higher than any other bank loan’s interest rates.

If your advance cash request gets approved by the company then company makes an agreement. Agreement is related with paybacks, holdback percentage and advance amount. As company finishes all the formality regarding that agreement, they transfer the cash in your business account.

Money repayment and holdback percentage

Your repayments depend on your company’s revenue. So if your company is earning good and you are getting higher revenue so repayment of your advance amount becomes easier. In merchant cash advance payment, it could be possible that you have to pay 20 to 40 percent amount extra than your principle amount.

Holdback is the percentage that depends on your amount you received from your business. It could vary according to your monthly amount. Holdback percentage rates lie between 10 to 20 percent and it can also change according to revenue of business owner or merchant cash advance company.

Difference between a term loan and merchant cash advance

There are so many financial companies and banks that provide loans to business owners. Term loan is also a type of loan. Term loans are given by a bank once in a year. They have particular criteria for every company; if the company fulfills those criteria bank provides them loans. For getting a term loan, you must have great Credit score without getting a good credit score bank will not find you credible and bank will not provide you loan. Merchant cash advance is not a loan it is an advance payment customer requests from business owner for their business extensions. In merchant cash advance, company can sell a small portion of your business if they don’t find your business eligible to pay cash in fixed time period.

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