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Debunking Myths About Merchant Cash Advance Loans to Small Businesses

For many people who are vaguely familiar with the term, ‘Merchant Cash Advance’, it is not something they want to deal with. This is probably because many business people have always viewed this kind of loan with some degree of suspicion. It is worthwhile for you as a small business owner to learn what it really is and what it really does.

Many businesses fall into financial problems which can be sorted out in the short-term by merchant cash advance facilities. You will not be in a position to take advantage of this facility unless you purge some of the myths that float around about such loans. Here we debunk these myths and we will see how they can help your business weather financial storms.

  • MYTH 1 – Merchant cash advances are expensive for you: This myth comes from the fact that most quick loans are deemed to be expensive. The truth is that the interest which is pre-agreed is the only money you have to pay over and above the amount you borrowed. Most service providers do not charge any application, processing or closing fees like banks do.
  • MYTH 2 – They are for failing businesses: Not true at all. All businesses come into financial difficulties once in a while. This does not mean that those businesses are on the verge of failing. In fact, merchant cash advance for small business, as short-term financing, has helped such businesses ride financial storms and emerge stronger and better afterwards.
  • MYTH 3 – You cannot use merchant cash advances to spur growth: When business owners, who know the value of these type of loans, take them, it is not because they just want to help with cash flow shortfalls or such issues. You can take such financing to acquire new machinery or improve your business process or carry out renovations, all which spur growth.
  • MYTH 4 – They have a negative impact on credit ratings: Strictly speaking, a merchant cash advance loan is where you sell your future credit and debit card sales to another party. This loan will actually help you avoid a bad credit score by helping you to pay off debts, maintaining your payroll and by preventing you from loading all your debts on your credit card.
  • MYTH 5 – The processing period is long: Here, the opposite is true. The time taken by most merchant cash advance companies to process your application can be as short as 48 hours and definitely not extend beyond one week. Comparing this period to the weeks or months a bank takes to approve your conventional bank loan, you know where the advantage lies.

Most business myths are easily debunked by having the right information. As a small business owner, merchant cash advances could be the difference between your business now and increased productivity.

Josh Wallace has written widely on small business funding in many respected journals. He is also an advisor to the government on small business promotion. For more information on merchant cash advance for small business, contact him for insightful advice.

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