Merchant loans, also known as merchant cash advances, are a one-time lump payment to a business in return for an agreed-on percentage of future credit card and/or debit card sales.
Merchant loans are one of the fastest ways for a business owner to get financing, with approvals happening in as short as 24 hours. Additionally, merchant loans do not require the business owner to have perfect credit, and these types of funding can be an excellent alternative for owners who have bad credit and cannot get financing from a traditional lender.
Merchant loans are usually collateral free and require minimal paperwork from the business owner, making the approval process quick and easy. These types of business loans have virtually no restrictions on how the cash is used and have no minimal monthly payments, allowing the business owner to pay the loan back at a convenient rate.
Small business owners, thanks to the online lending space, have hundreds of financing options from traditional and alternative lenders, offering quick and easy solutions. However, small businesses seeking a merchant loan should be aware of the following three deceptive traps that could end up costing the business more in the long run:
1.) Know when business credit services are essential – Be wary of any lending firm encouraging the necessity of business credit services to apply for a merchant loan.
2.) Know the price your business pays for speed and convenience – Business owners should be cautious when considering a merchant loan, especially if the rates and pay-off time frames are exceedingly harsh.
3.) Know your own business plan – Directly handling the development of your business plan and financial projection, it ensures that you, as the business owner, know the intricacies of the company and have defined goals for growth.
Utilizing proprietary technology, Bizfi’s lending platform can help business owners get real-time offers for merchant loans: Find Out How