Funding Your Business With A Merchant Account Loan
A merchant account loan is an unsecured advance of cash on revenues a business will
realize in the short term, usually touted by independent lending companies. Not like the conventional loan, working capital is secured with future credit card receivables and entails a much less paperwork than a normal small business loan obtained from the bank. Ideal for businesses that don't have several years of work history experience, a merchant account loan provides necessary working capital immediately.Banks look at five characteristics when figuring out whether to extend a business loan. These characteristics, called "the five Cs," are as follows: character, capacity, collateral, capital and conditions. As normal loans are only extended to those merchants with exceptional credit and a proven record, it is understandable that many merchants simply don't qualify.
The things necessary for a merchant account loan are less stringent, and payment terms are likewise more flexible. Repayment is tied ultimately to the credit card receivables taken in on a daily basis. However, the entrepreneur should use some caution when applying for this type of working capital.
While a reputable merchant loan company will provide the necessary cash at a viable price, others will try to charge exorbitant interest, ask for up front costs and have unreasonable default terms. Looking at the fine print is needed.
While many business consultants will suggest that finding working capital from family and friends, credit cards and personal savings are better choices, they are not always realistic. Additionally, it can take time to attain such funding, and it really is best not to do business with family and friends. Turn around time on this type of funding is most commonly under a a few business days, and with no fixed payment numbers, a merchant account loan is a excellent way to acquire financing quickly without involving additional parties.
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