Applying for the most appropriate form of business finance is vital to the continued growth and success of any business, regardless of its size or sector. Whether it’s for a new or existing business project, cash injections or releasing equity, there are many finance products available which are designed to help us achieve our goals. However, the application process can become lengthy and time-consuming, requiring us to present a significant amount of paperwork. But, there is one finance product that changes all that, helping a wide range of businesses acquire the funds they need to move forward. That product is Merchant Cash Advance.
What Paperwork do you need to provide for a Merchant Cash Advance Loan?
One of the most flexible and unique products on the market, providing an essential lifeline for many businesses owners is Merchant Cash Advance. This product is often considered a means of quickly acquiring external funding ready for when you need it most. Plus, one of the many attractive qualities surrounding this product is that the funds obtained could be used to support anything you may require, from business projects and hiring professional services to seasonal trading fluctuations and more.
But what makes Merchant Cash Advance so special is how quick and simple the application process is. To qualify for this form of business finance you must support card payments and need only produce, on demand, your business’ sales reports, outlining the spending patterns of your credit and debit card customers.
Card and digital-based sales play a vital role in Merchant Cash Advance, affecting all areas of the agreement. When applying, a potential lender may ask to review sales reports for 3 or more consecutive months. Providing these is essential as they allow lenders to determine whether your business can afford the product, the size of any potential lump sum they may offer and the way in which the product is eventually repaid.
Why are card-based sales reports important?
Your sales reports will play a vital role at every stage of the agreement. The consecutive monthly sales reports submitted will be studied closely by any potential business lender you apply to. What they’ll be extracting from them is the reliability of your card sales, customers spending patterns and whether a Merchant Cash Advance solution is a viable option for your business. But, another reason why they’re so important at such an early stage is that they’ll determine the size of any potential lump sum on offer. Lenders use your card sales for each month presented and will work out an average. What this means is that if your business roughly earns £5,000 in card sales each month, the size of the lump sum will be in the same region.
Your card-based sales will also be important when you begin making repayments. Merchant Cash Advance uses Flexible Monthly Repayments in order to repay the lender. How this works is by the lender automatically taking an agreed percentage from each card-based transaction your customers make. For example, if a lender was to offer a rate of 18%, it can be expressed as 18p from every £1 spent on your business’ goods and services. Were you to review your sales reports during these months, you’ll notice how the sums used to repay the lender can vary depending on whether you’ve experienced higher or lower card sales during these months – in a month of higher sales, you’ll repay more and vice versa with lower sales.
Are there any other forms of paperwork to submit?
Typically, the answer will usually be no.
The reason is that Merchant Cash Advance mainly works around your credit and debit card sales. Yet, sometimes it is possible for lenders to ask for your credit scores and business histories on occasion. If you do happen to encounter such a request know that no matter what condition they’re in, they’ll have little to no bearing on the lender’s decision. When dealing with this type of finance, their attention will be on whether you have reliable card sales each month and can eventually repay the product.
This is also why this form of business finance is so quick to process. Because lenders generally have little or no interest in reviewing your credit and business history, unlike most other forms of finance, decisions and monetary transfers can often take place in as little 48 hours of applying. As such, this makes Merchant Cash Advance one of the most accessible finance solutions on the market.
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At Rangewell, our services are clear and transparent. We support a wide range of SME businesses of every shape and size, for finding every type of finance. Follow us on Twitter and LinkedIn for business tips and tricks, and feel free to call us on 0203 637 2340 if you’d like to chat about what we can do for you.