Your business like so many others may one day require fast business funding. The issue is where to turn as there are so many choices especially with alternative lending at an all-time high and so many products to choose from. You may be looking for the best value loan or credit card but is it the right product for your business?
You may look to a business credit card for your short term finance solution. Sometimes credit card companies only qualify you based on a minimum or maximum annual turnover and in some cases, the card company would need your last two years accounts. A company credit card does give your business the flexibility it needs for cash flow, however, there are some downsides associated with this type of product. There can be associated charges and penalties for going over your credit limit. There can be charges associated with missing a payment or even withdrawing cash. The product itself can be an expensive option too with high associated APR rates.
In many cases, a blemish on your company or personal credit history can void your application for credit so if you are searching for business loans for bad credit you may look to another option.
This is where a business cash advance comes into its own. It’s a new form of alternative business funding which has helped thousands of businesses across the UK find the funding they need to survive and thrive.
The product otherwise known as a merchant cash advance works by raising funds to the equivalent or in some cases up to 150% of your monthly credit and debit card sales. Let’s say for example you take £5000 per month on card sales from your customer, you may be eligible for a loan between £5000 and £7,500. The same applies for businesses turning over a lot more. In fact, a cash advance is used to raise between £3000 and £300,000.
Business Credit Card v Business Cash Advance – the advantage of a BCA
So how does a business cash advance work in more detail? Well, with a Business Cash Advance, there is just one repayment figure agreed on upfront. Thereafter there are no hidden charges, fees, early or late repayment penalties – just a transparent cost.
The real advantage with a cash advance is the way it repays. Your business only repays the loan when it makes a sale via a credit or debit card transaction with a customer. A percentage of this sale is repaid automatically to pay off the loan and the balance is transferred to your bank account. This way your business pays less when you are less busy removing the pressure associated with making fixed payments. This is sometimes called a revenue advance as it repays based on your active revenue.