Today’s options for obtaining a business cash advance
If your business is in need of capital quickly to bridge gaps between contracts, a few options may be at your disposal. Although working with a bank will tend to be a long, drawn out process, direct lenders can get the job done quickly if you meet certain requirements.
A business can get a cash advance from a direct lender on short notice by either applying for a working capital loan or what is known as a merchant cash advance. Both have daily, weekly and monthly payback options but differ in that a MCA loan requires credit card transaction statements. If you can show a number of deposits into your business bank account every month, it’s likely you can get approval for some amount of money.
How quickly can I get a business cash advance?
Approvals for both a merchant cash advance or a working capital loan are quite similar and have comparable requirements. The approval process typically takes 24-48 hours. Once approved the money can be wired into your business account in 2-3 business days. The entire process from start to finish can be completed in 2-5 business days depending on the business profile and credit factors associated with it.
Which is a better: Merchant Cash Advance or Working Capital Loan?
The MCA (or Merchant Cash Advance loan) was a very popular source of quick capital for businesses in the past. However, since the 2008 financial crisis, the working capital loan was invented and seems to have a lot of advantages business owners appreciate.
One of the most important features of a working capital loan is that cash is deposited into your business bank account with absolutely no strings attached as to how that money is spent. This means a business owner can use this capital to buy materials, pay salaries, purchase equipment or anything necessary to grow the business. There wont be any third party financial institution interested in seeing how this money is spent.
Additionally, a working capital loan is a great opportunity for a business cash advance because the terms of these loans tend to be longer than it’s rival. Working capital loans can extend out to as many as 24 months, whereas a merchant cash advance averages in the range of 3-6 months. This allows businesses more time to leverage this capital before paying it back. This aspect can be critical.
How do I pay it back?
This is yet another feature of the working capital loan that makes it more advantageous for the average business owner than a merchant cash advance. Although some of these loans require a daily draw from your business bank account every business day, owners with good credit can often qualify for weekly and even monthly payback options.
There are no options with a merchant cash advance and the payback can be hazy. A lender may take out a percentage of the daily deposits and on a good day for your business more money than you might expect could come out of your account. This inevitably causes issues for businesses and their owners. Not knowing exactly how much money will be coming out of the bank account on a given day is not a preferable way to run a business.