Small Business Cash Advance vs. Merchant Account Loans

Business Cash Advance

It’s important to have some emergency funds available for your company. If not, you should at least have a line of credit you can draw from or have business credit cards you can use. However, if you don’t have any of those things available, you have a few other limited funding choices in case of an emergency. You really can’t get a loan from a bank, as the approval and processing time will take too long. There are two options you have available to you, though. Today, we will be discussing small business cash advances and merchant account loans.

The primary difference between a small business cash advance and a merchant account loan is the structure of repayment. In the case of the merchant account loan, there is no interest. Instead, you must pay what is referred to as a discount rate at the time the loan funds are given to you.

For example, if you have a 10% discount rate, and you borrow $10,000, you will only be given $9000 because $1000 is 10% of $10,000. You will have to repay the whole amount. How you repay is interesting, as well. Instead of paying regular monthly installments, a small fraction of the loan is paid back with each point of sale credit card transaction.

This is made possible because the lender partners with credit card processing companies. You will have to change your processing company account (called your merchant account) to the new processor. The target time for repayment is typically six months based on past sales, but it can take as long as a year without penalty.

The other option is to get a small business cash advance. These are not an inexpensive option, but they do make funds available to you very quickly in cases of emergency.

For more information, go to Small Business Cash Advance at

Small Business Cash Advance vs. Merchant Account Loans was last modified: October 10th, 2011 by Amit Kraidman
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