The Differences Between Merchant Cash Advances And Business Loans

Business Loans

There is simply no denying that running a business is both rewarding and challenging. Heck, part of the reward is that it is so challenging. When you finally reach the goal you have set, you will truly feel like you have accomplished a great thing. This would not be unlike paying off a long-term debt like a car or home. Of course, these feelings of elation are going to come easy. This is especially true in today’s competitive market. When you combine this with all the financial difficulties that businesses face today it is more than easy to understand why many run into money problems. However, with merchant cash advances and business loans, you can prevent this from happening to your business.

Working Capital Loans

You can look up both the terms merchant cash advances and business loans. What you will discover is that they are both considered working capital loans. This probably doesn’t really help you unless you are already a financial wizard. And, if that was the case, you probably wouldn’t need to borrow money in the first place. To break things down into simpler terms, both cash advances and business loans are financing options that can be used to contribute to business purchases like inventory, expansion, or even hiring employees. While these two loans might be similar it is more than important to understand that they both will come along with many differences as well. Not only will the qualifying requirements be different, but you might end up paying more money back with a business loan due to the higher interest rates.

How Business Loans Work

When you apply for a business loan through a lender like HittaSMSLån and are approved, you will find that business loans work in a similar manner to that of mortgages and auto loans. The lender will give you a specified amount of money in which you will pay back in fixed, regular payments. Payments can also amortize over the term of the loan. Not only this, but the interest rates can range from anywhere between 9 percent and 50 percent. The repayment schedule is usually set when you first apply for the loan and it can vary from daily to monthly. That being said, it should be noted that there will always be a fixed maturity date with these types of loans. This amount will always have to be repaid in full.

How Merchant Cash Advances Work

A merchant cash advance loan should be thought of like a loan on your future credit card sales. These types of loans are usually only ideal for those businesses whose revenue comes mostly from credit and debit card sales. This would probably include retail shops, markets, restaurants, clothing stores, and gas stations. Even though these loans are ideal for these types of businesses there are merchant cash advances available for other niches as well. A merchant cash loan is pretty self-explanatory in the way that it works. The lender simply gives you a sum of money in exchange for a slice of your future sales. This is a great way to get money upfront and quick, but your fees for the loan are based on your ability to repay the loan.


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