Getting a merchant cash advance loan is fairly easy. It’s not as straightforward as you would expect it to be, but the process is still easier than other types of loans. Further, many companies make the distinction between a loan and a merchant cash advance. They argue that a business loan is a loan, while a merchant cash advance is not. Either way, the benefit for business owners is that this type of funding option is more flexible.
The repayment terms are not as burdensome and here are some of the things you need to know about the repayment terms for merchant cash advance loans.
Cash advance companies point out that they are making a deal out of your future income. They are not necessarily giving you a loan. In turn, you are expected to repay the money whenever you make a sale. A purchase of your product or any money at all deposited to your business account that came from a customer will be shared with the cash advance lender.
A certain amount or percentage will be automatically deducted to your credit account until the conditions of the repayment are met. In a sense, you are paying the loan on a non-fixed installment basis. The terms are decided upon the possible duration that your business can accumulate enough sales to repay the loan. That essentially means you won’t have to repay the loan in full until your business can stand on its own. It’s a surefire way of creating a business and repaying your loan.
However, also keep in mind that the loan still has a specific duration, after which you will have to pay it in full regardless of whether your business has profited. In this case, your business has failed. If things turn out nicely and you are able to repay the loan, you will have a business that generates a steady profit!