Using A Merchant Loan To Raise Funds
Similar in nature to a small business loan, a merchant loan is working capital a
small business owner receives for different purposes that will need to be repaid within a six to 8 month duration depending on how much financing is received. Merchant Loans are becoming more and more utilized as traditional banks are adding to their necessary conditions for small business loan approval.
Distinct to conventional bank loans, Merchant Loans do not require good credit. In fact, if you were rejected by the local banks and require access to working capital in a fast amount of time, a business cash advance may be a convenient answer. As a entrepreneur would expect, the stipulations placed upon such cash advance products generally include more expensive interest rates since the advance company is taking on a higher risk.
Some agreements permit the merchant tie the repayment schedule to income levels of the business. This is particularly useful to a entrepreneur that has significant variations in income from month to month. Payment is ultimately attached to credit card purchases, facilitating smaller payments during slow months. This feature is particularly useful to those small business owners who are seasonal in nature because a fixed payment each month is not mandatory.
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Merchant Loan can be of particular use to those small business owners who have not been in business for long. To get a conventional bank loan or a loan from the Small Business Association, a entrepreneur may be stipulated to provide proof of collateral, an extensive business history and a credit report with excellent scores. When a entrepreneur is just starting out in business, this may not be possible, especially in today's economic situation.
Nevertheless,caution is advisable when in the market for a
Merchant Loan. It isn't unlikely to find growing payment programs, application costs and a mandatory change to a specific credit card provider. Reading the fine print of any arrangement is a must. For those small business owners who find themselves in need of funding and have not many alternate choices available, the business advance can be especially helpful instead of to waiting months for a normal small business loan you most likely will not be approved for.
by: Daniel Samoohi.
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