Almost all business owners know that Merchant Cash Advances are the best type of financing options out there. They have helped countless businesses with cash flow issues, growing pains and even getting started. You probably already know about how risky it is to use credit cards for financing your business needs and how much interest you end up paying. But did you know there are even better alternatives that can offer you lots of benefits? We’ll compare a Merchant Cash Advance and a business loan and lay out the differences between them.
Merchant Cash Advance vs Business Loan: Definition
What is a Merchant Cash Advance (MCA)?
Merchant Cash Advance is the fastest way to get your cash. Banks and credit unions require you to wait up to two weeks while they process your loan. If you get a merchant cash advance, you can have your money within a business day. An MCA is literally the fastest way to get cash to your bank account.
A Merchant Cash Advance business funding solution from Alternative Funding Group provides cash advances to all types of businesses. Alt Funding knows that these businesses will repay on time with their future credit and debit card sales. We can approve an application the same day and you can get your cash advance within 24 hours.. You don’t have to wait for weeks to get your money.
What is a Business Loan?
Business loans are great for longer term financing needs. They are usually from a bank or credit
union and you won’t get the money for months. A business loan can take up to 12-18 months to process depending on how long it takes for you to meet the requirements and get approved. You can get approved much faster if you have a credit card or a personal loan to use as collateral. But the rates for collateral loans are much higher.
A business loan can be a good option if you need money to pay bills or to grow your business in the long term. A Merchant Cash Advance is paid back using future sales. A business loan is repaid from your future business earnings.
Merchant Cash Advance vs Business Loan: Pros
The biggest advantage of a Merchant Cash Advance is the fast money. You don’t have to wait for weeks. You can typically have your cash within 24 hours afterthe approval. The biggest disadvantage of a Merchant Cash Advance is the repayment terms. They are usually short, up to 12-24 months. If you’re not able to meet them, you will have to pay for the interest on the full amount.
Business loans have their own advantages. You have access to a lot of different banks, even online banks. The interest is much lower and you have a lot of options to choose from. You can get a business loan with collateral at a very low interest rate. A business loan can be a great option if you need money to grow and expand in the long term. Traditional lines of credit can only be used when you’re in good standing and the business has good credit. If your business has issues with cash flow and you need money fast, a Merchant Cash Advance is a better option.
Merchant Cash Advance vs Business Loan: Cons
The biggest disadvantage of a Merchant Cash Advance is the interest. If you’re unable to pay back on time, the interest can be extremely high. You can obtain a business loan at a much lower interest rate. The interest rate for a Merchant Cash Advance is usually in the 20%-30% range.
Business loans have their own disadvantages. The interest can be much higher and you have to go through a lot of paperwork to get approved. You will have to wait for a few months to get your money. And you have to meet certain requirements to get a business loan.
All in all, Merchant Cash Advances are the best way to get fast funding for your business. You should be extremely careful with the way you spend your MCA and the interest rates. But if you have a clear plan for how to use the money, a Merchant Cash Advance can help your business grow and provide you with lots of advantages:
- More cash for your business
- More money for expansion
- More money for marketing
- More money for payroll
- More money for research and development
- More money for growth
- Apply for a Merchant Cash Advance at Alternative Funding Group
We help businesses get the fast business funding they need to grow. Alternative Funding Group’s MCA is fast and easy. We will approve you the same day and you can get your money within 24 hours. For all your business financing needs, Alternative Funding Group can help.