Small company operators in India face significant difficulties in obtaining capital for their various company operations. Due to a lack of collateral, exorbitant interest rates on business loans, and extensive paperwork requirements, businesses and startup owners are forced to seek other financing sources.
Compared to typical company loans, a merchant cash advance (MCA) has several advantages, including a higher approval rate, more flexible payback terms, and faster access to funding. However, few individuals are familiar with MCA.
What is Merchant Cash Advance?
The phrase indicates a cash advance loan on future credit and debit card swipes that small business owners can obtain from lenders. It is a comparatively recent source of finance for entrepreneurs. Although merchant cash advances have been accessible in the United States, Canada, and other industrialised countries for an extended period, they have only lately gained popularity in India as a quick and hassle-free technique of generating capital.
How Will It Work?
After you apply for and receive approval for an MCA, the lender offers you a flat payment. Automated debits subsequently repay the loan against the EDC machine from your credit or debit card sales. The payback time might be a minimum of 90 days or a maximum of 30 months, depending on the credit/debit card purchases.
The cash advance amount is determined by your typical monthly credit/debit card sales. Lenders offer credit card machine loans between 100% and 400% of your card sales volume. The lender will request your credit card sales statements for the previous three to six months to evaluate your eligibility.
Merchant Cash Advance Features
Numerous businesses in India, even small enterprises, accept credit or debit card payments. Essentially, a loan against a card swipe machine isn’t a loan; instead, it is an advance payment from lenders.
You seek a lender for a merchant cash advance like a borrower. The lender considers your businessвЂ™s typical monthly revenue generated via credit and debit cards and then lends you the appropriate amount. You may then repay the loan whenever you earn money from consumer credit, and debit card swipes.
Simple, No-hassle Application:
Unlike typical credit card terminal loans from banks, merchant cash advances are relatively simple to apply for. You can obtain your cash within a week with little paperwork and quick qualifying. Indifi, for example, offers same-day clearance.
Amounts up to Rs. 1 Crore:
Traditional banks are not as lenient when it comes to swipe loan amountsвЂ”adding to it the masses of documents and evidence of credit score that you must present, which all add to the application’s length. FlexiLoans, conversely, allows you to borrow up to Rs. 1 crore, based on your monthly card settlement and capacity to repay over 36 months.
Low Credit Scores Doesn’t Matter.
It is one of the most significant roadblocks faced by small enterprises. To qualify for bank loans, you require an excellent credit score. The qualifying requirements for merchant loans advanced at well-known online lending companies such as FlexiLoans are straightforward.
- Only one year of operating experience
- Monthly Credit/Debit Card swipes of at least INR 20,000
- Monthly total sales from the business of at least INR 100,000
- At least six months’ worth of credit/debit card swipes at your business
- Applicant must be aged above 21 years
Unlike traditional business cash advance loans, merchant cash advances do not need the submission of security such as real estate or other assets.
Rapid Funds Access
The great aspect of merchant cash advances is that you may obtain funds instantly without waiting for lengthy approval. Additionally, you may spend the funds received from merchant cash advances as you like because there are no limits on what you may or may not do.