By Steve Bernardone, Merchants Capital Access

Running a business is hard work at the best of times. It can take a while to acclimate yourself to the floating revenue cycle many businesses experience. While you learn this cycle, or even if you have been in it for a while, you may find yourself short on operating capital when a major payable comes due. Two of the many financing options available to fulfill such capital needs are a merchant cash advance and a small business loan.

If you have less than stellar credit, or are a newer business without the years of financial data preferred by banks, a merchant cash advance is an alternative to consider. You do not need to put up collateral and the transaction does not show up on your personal credit history. Additionally, a merchant cash advance does not have any stipulations on how you can spend the funds.

You do not need collateral because you are not receiving a loan. You receive an agreed upon sum based on at minimum three months of credit card processing statements. The merchant cash advance company takes a percentage off every credit card transaction until the advance is paid off. This flexible approach is a great fit for many merchants, particularly seasonal businesses. If receipts are down during a slow period, they pay less of the advance back. If receipts are up during their high volume months, they pay more of the advance back and the balance drops faster.

The volume of paperwork for a merchant cash advance is generally much less than other small business funding options. Many cash advance providers ask for at least three months of credit card processing and bank statements along with a copy of your driver’s license, a voided check, and a signed, completed application.

Compared to a small business loan which generally takes at minimum 30 days to fund, and frequently 60 to 90 days, a merchant cash advance typically takes 3 to 5 days. The initial paperwork takes approximately a day, approval is acquired within 1 to 2 days, and the advance is generally funded within 48 hours.

In today’s lending environment small business loans can be very difficult to obtain, and while merchant cash advances tend to cost more than traditional small business financing, they can be a viable alternative financing solution for small businesses who need immediate access to capital.

Steve Bernardone is the chief information officer at Merchants Capital Access (MCA), one of the premier merchant cash advance providers. To learn more, please visit Merchants Capital Access (MCA)