Is a Merchant Cash Advance Right for Your Irish Business?
Posted by on 19th August 2022
What is a Merchant Cash Advance?
A Merchant Cash Advance is a type of short-term loan that is often used by businesses to meet their short term financing needs. This type of finance is ideal for businesses in the hospitality and retail sector that need to purchase stock or need working capital.
How does a Merchant Cash Advance work?
A Merchant Cash Advance works very similarly to a traditional term loan. The application process is the same. A financial lender still needs to review your accounts but will also look at your debit and credit transactions to determine how much your business brings in on a daily basis during slow and busy periods.
Once approved the advance is drawn down and repaid daily using a percentage of the business’s credit and debit card sales. The percentage repayment is agreed with the borrower before drawdown has commenced.
How Do Merchant Cash Advances differ from a Business Loan?
Merchant cash advances primary difference is how it is repaid. Unlike traditional term loans that are repaid monthly an advance is paid daily. The lender will agree what percentage of sales will be required to fulfill the repayments and this done automatically.
Interest rates for Merchant Cash Advances can be lower compared to term loans. Linked Finance offer advances starting at just 4%.
Merchant cash advances are often used to finance short-term needs such as inventory or equipment purchases or to cover unexpected expenses. Businesses that use merchant cash advances typically have high sales volumes and can repay the advance quickly through their future credit and debit card sales.
What are the benefits of a Merchant Cash Advance?
There are several benefits of a Merchant Cash Advance, including:
Flexible and Scalable – The daily repayments adapt to the pattern of your business. Repay more at business peak times, pay less if things slow down
Quickly boost cashflow – Get a decision within 24-hours. An advance is short-term financing that helps your business without leaving you short on cash
Minimal time and effort – Daily repayments are made automatically. No remittance, no monthly transfers, so you can concentrate on running your business.
Hassle – free repayments – Never worry about missed repayments. Repayments are taken ‘at source’ which means they come out of your card sales before they go into your bank account.
How to apply for a Merchant Cash Advance?
To apply for a Merchant Cash Advance simply apply online. The application takes less than 2 minutes and you will be called back by a member of our team to take you through the process. To learn more simply fill in the form or call 01 906 0300.