A lot of business owners have heard of a bad credit business cash advance but don’t truly know what it is. They assume that its a merchant cash advance and requires one to process credit cards. Up until about a year ago this was the case. Recently, alternative lenders introduced an unsecured business loan product that mimics the merchant cash advance product but has nothing to do with credit card processing. Instead of payments coming out of the daily credit card totals an ACH payment is initiated daily from the bank account.
Types of A Bad Credit Business Cash Advance
A bad credit business cash advance loan typical costs more than traditional bank loans. Reasoning is that the underwriting allows for much more risk then that of traditional bank underwriting. Less weight is given to a credit score and more is given to overall business performance. The term of a bad credit business cash advance is also much shorter usually between 3-12 months with the average term being five months. This is to reduce the risk as well and is the model adopted by those alternative lenders that provide business cash advances. A bad credit business cash advance in short is a higher rate or cost of credit paid back over a short term. They therefore should be used to satisfy a short term cash crunch. The repayment structure is daily as well so the day after receiving your loan daily payments start so it is best to utilize the capital as soon as possible to get the best ROI on your money. Although you can borrow for any reason it probably wouldn’t be a good idea to get capital to use on a long vacation.
A bad credit business cash advance whether a merchant cash advance or an unsecured type ACH loan work out when used correctly. Use it wisely on an inventory purchase that will return much more money than the cost of the credit or on say buying a truck that will eventually make you multiples of what the capital cost. To take advantage of a bad credit business cash advance apply here.