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Getting a Merchant Loan

merchant loans

Before discussing how to get a merchant loan, it’s best to first understand what it is, what it’s for and what benefits one gets from it. Technically, a merchant loan is any short term cash advance against your business’s receivables. The amount loaned is paid back through fixed debit or a certain percentage taken on off of each week or month’s sale.

Since the recession, merchant loans advance has become a popular means for micro, small and some medium enterprises to gather capital, considering the means to qualify is not as difficult to fulfill as the extremely stringent lending criteria the US government has placed. Despite the name, merchant loans advance are not actually loans. The lump some money you will receive is considered an advance for the future debit and credit card sales your business will eventually have. The money is often used to finance expansion, operation or other sudden expenses.

Some of the advantages of merchant loans advance include the speed of processing. This allows borrowers to have an almost instant access to the capital they need. With this financing method, the business owner has more leeway as to how much money is allocated to pay the merchant loans advance company, depending on how well or slow the business is. That means you can pay as little as your budget allows during the slow season, and as much as you can during the peak season. Your monthly dues is dependent on your sales volume, making it more sustainable and easier to bear for small businesses.

Now that you understand how a merchant loans advance works, then it is now time to list down how get one.

Fill out the application forms and submit with the supporting documents

As this is far less invasive than a usual lending criteria followed by banks, which gives out loans, you typically only need to fill a 1 to 2-page application form. You will also need to submit a copy of your government IDs, like your passport or social security ID.

Along with those, provide supporting documents, including bank statements, tax returns or a lease copy of your store or office. The point is to show that you are qualified to get the funds. Remember that what the merchant cash advance company is looking for is potential in the business to earn, more than your personal credit history.

Wait for approval

Once you’ve submitted the application form and the other documents, wait at least 24 hours for the approval.

Install their credit card machine

The way the lending company is able to earn back the money they gave you is by swiping credit and debit cards through the credit card machine that they will be providing. You will have to install and use that machine, so the merchant cash advance company can successfully take a portion of the sale you made. This is not permanent. Once you’ve paid up your debt, you are not obliged to use it anymore.

Get the lump sum amount

Upon approval and installation of the device, the merchant loan company is going to deposit the money to your account. That also means that the process  of repayment has officially begun.