3 Signs You Should Consider a Merchant Cash Advance

Managing a small business is challenging. One of the common challenges for business owners is financing. Your company might not have a lengthy credit history or collateral to apply for a bank loan. Whether you want to grow your business or cover unforeseen expenses, you have come across other financing options. Merchant cash advance and cheques factoring are some of the available options for small businesses.

What Is Merchant Cash Advance?

A merchant cash advance is an alternative financing option for small businesses. You can take the funds upfront and pay them off with a percentage of future sales. The MCA is an ideal solution for businesses that need fast funding and might not be eligible to take a bank loan. The availability of funds is another excellent advantage. If your business needs the funds fast to proceed with the operations, the cash advance will be approved within a day or two.

PROS

Fast access to funds

When timing is crucial and you can't go through the lengthy bank approval process, the MCA is your solution. Small businesses can get funds within a day or two from submission. Unlike the traditional bank process, the financial institutions that issue MCAs don't do rigorous checks. They will check the business's past sales to determine whether they qualify for a cash advance.

Ideal for businesses that work with cash and credit cards

Retail and restaurant businesses rely on a high volume of credit card sales, making them ideal for obtaining MCA. If your business depends on cash or credit cards, a cash advance is the ideal financing method. This opportunity is perfect for the ones that don't rely on invoices. Instead, they take a percentage of the credit card sales to repay the loan.

CONS

High-interest rates

Merchant cash advance comes with higher interest rates than traditional bank loans. The convenience of having the funds fast will cost more. However, the price is worth paying when you need urgent funds to proceed with the business operations.

What Is Cheques Factoring?

A post-dated cheque is a cheque that can be cashed on the indicated date on the document's face. It is a form of advance payment and can be cashed on a specific date. According to Canadian laws, a cheque can't be cleared before this date. If you still need cash to keep your business's liquidity, you can sell the cheque to a factoring company.

PROS

Fast approval

Depending on the date indicated on the check face, you might have to wait long to receive the payment. If you need to meet your business needs urgently, factoring your cheques will provide you with funds quickly. They will pay off a particular value of the face value while keeping a specific percentage as a fee.

No credit score checks

When applying for a traditional bank loan, they will do a rigorous check on your financial history. When your small business is relatively new and doesn't have a credit history, you might be restricted from obtaining such loans. Your ability for cheque factoring isn't assessed with credit history, and you aren't required to disclose collateral. This is very important, as you don't need to put your property or equipment at risk. The factoring company will check the check for authenticity.

Not deal with cheques

Having to deal with cheques is a tedious job. Passing this responsibility to a third party means less time spent sorting out cheques so that you can focus on the more important aspects of your business.

CONS

Higher cost

The factoring company will charge fees to provide you with the cash in advance. They will usually pay 80% of the amount indicated on the face. However, the high cost might pay off if you need money urgently.  

Requirements

Cheques factoring companies might have specific requirements for cashing out your document. For example, the check drawer should be a reputable entity. Also, the factoring company might have particular requirements on the cheque's active time.

Merchant Cash Advance vs. Cheques Factoring

For cheques factoring, you will pay a fee to the factoring company expressed as a percentage of the total amount. On the other hand, you will pay off your MCA as a percentage of your future sales. When choosing the suitable financing method for your company, select the one that is a better fit for your needs. We at 2M7 are dedicated to providing the needed funds to enhance your business's liquidity without restrictions on how to use them. Get in touch with us, and we will answer your specific needs!

With COVID-19 vaccines being administered all around the world, it's only a matter of time that businesses resume their work in the field. While corporations will have little to no hurdles, it will be small businesses that will have to make more effort. You don’t need to be an expert to understand these issues in today's economy. Some help in reopening will allow any sort of company to see instant results if capital is invested and used effectively. This is where merchants cash advances come in. An MCA works very differently. You’re receiving funding from a financial solution business. However, the perk of getting an MCA is that you only have to pay it back from a percentage of your sales. If you aren’t making any sales, you won’t have to pay back anything. So, if that doesn’t sound like a reasonable enough argument to make you get an MCA to nudge your business in the right direction, let us continue. Here are five reasons why cash advances will work in our company’s favor.

Easy to Qualify

Today's economy makes it troublesome for businesses in terms of finance. Conventional loans have rigid requirements that are turning people away. Moreover, they take more time, and sometimes your request may be denied. Merchant cash advances are more viable as they offer a sum of money at a fixed rate, and are easy to qualify for, even for first-time owners. While bank loans require hours to fill out, these applications contain brief questionnaires, prioritizing output rather than processing information. Expand Office Space Upgrading your office will be one of the heftiest investments you’ll ever make. But, it’s a necessary one. If your office space no longer meets the requirements of your business, you have to move into something that’s more fit to your needs. However, it’s not cheap. Moving into a new office requires a ton of money upfront. An MCA can be a great way to complete the down payment and move into the new office.

Quick Funding

Traditional bank loans have an approval time for weeks, and it is not even certain if your application will get accepted or not. If you don’t want to get caught up in those waiting times, an MCA is the best option. Funds from an MCA could reach your account the same day as your application is submitted!

Works Despite Credit Score

There are cases when businesses are in a stable situation and may have a poor credit score. In such cases, qualifying for a loan is impossible as banks want a surety that you are a viable candidate for receiving money. A history of bad credit is a red flag that tells a bank you won’t be able to repay the loan. An MCA gives you a much reliable alternative for cases where credit scores are low. There will be some things that will change but you will still be entitled to receive a cash advance!

No Restrictions

With bank loans, there are a ton of rules and regulations that restrict you from spending your money on certain places. With an MCA, there’s no such limitations. You’re free to invest your advance into anything as long as it helps in the growth of your business. An MCA can help elevate your operation to new heights with greater flexibility and opportunities. If you’d like to learn more about obtaining a merchant cash advance for your business, 2M7 Financial Solutions is here to help. We offer merchant cash advances to businesses in all industries and of all sizes. Gain an edge over your competition and contact us today.

2M7 Financial Solutions is proud to announce the recipient of the 2022 “Forward Thinkers” scholarship – the annual scholarship that recognizes distinguished and entrepreneurial students who encompass 2M7’s values and demonstrate a genuine desire to make progressive strides that help drive their desired industries forward.“We’re pleased to award this year’s Forward Thinkers scholarship to Beiya Xie, a Business student majoring in Entrepreneurship and Innovation, who challenges the status quo and thinks outside the box to find innovative solutions to improve her family’s small business,” said Avi Bernstein, CEO of 2M7 Financial Solutions. “Since its inception, 2M7 has been driven to support forward-thinking small businesses in their journey, and Beiya demonstrates a level of dedication and innovation that is at the core of our business values.”As a proudly Canadian owned company, 2M7 strives to stay at the forefront of its industry and offer an alternative lending solution that better fits the needs of small businesses in Canada – giving them quick access to the funding they need to expand and accelerate their growth in order to succeed in today’s competitive landscape.“Canadian entrepreneurs and small businesses are the backbone of our economy, and 2M7 has an unwavering commitment to helping them grow. Just as with our small business clients, we believe it’s important to give students the opportunity to excel in their fields,” said Avi Bernstein. “Beiya demonstrates a deep passion for improving the products her family business offers, a vision for expanding the services they provide, and a dedication to customer service excellence that 2M7 is proud to support.”Founded in 2008, 2M7 Financial Solutions has grown into one of Canada’s largest merchant cash advance providers – providing over $250 million in small business funding to date. With extensive expertise in Canada’s lending landscape, and a deep understanding of the challenges that small businesses face in getting approved for loans, 2M7 helps business owners get the financing they need.

About the “forward thinkers scholarship” by 2M7

The ”Forward Thinkers” scholarship is an annual scholarship program, established by 2M7 Financial Solutions to recognize outstanding students who are pursuing or entering full-time studies in Business, Finance, or an equivalent program. The scholarship is awarded to students that encompass 2M7’s core values and demonstrate a genuine desire to make innovative stride that drive their industries forward. For those interested in applying for the 2023 scholarship, please follow 2M7 on Facebook for updates on next year’s scholarship.