Merchant Capital Advance Funding Tips

Helpful Tips for Finding the Right Merchant Advance Funding

Even though a lot of business owners are still new to the idea of the merchant advance, it is an industry that is now in its eighth year. Thousands of small business owners throughout Canada have taken advantage of the quick access to cash to bridge some short-term needs and end up flourishing as a result. The traditional lending sources – banks – are still conservative with their small business lending, choosing to bring in revenues from credit cards, credit lines, personal mortgages and the related service fees. They will deal with larger businesses because of the economy of scale, but smaller business owners are still struggling to find financing through traditional means – which is why merchant advances have gained popularity.

But is there a downside? There is no perfect solution to any problem in the business world. Sources of alternative funding for small businesses are obviously a good thing. However, the fact that merchant advances remain largely unregulated means that small business owners need to be extremely careful before signing a contract to take out one of these advances – because there are some companies offering this money but abusing their borrowers in the process.

Merchant funding source – Your one stop shop for merchant capital funding

At Amansad Financial, we don’t have anything if we don’t have a strong business reputation. Our word is our bond, and we have built trust with a clientele that spans much of Canada over the years. We are excited about helping clients with merchant advantages because there are plenty of Canadian businesses that need access to this sort of funding, and these advances give them that burst of liquidity that helps them get through a dry patch, or through a growth spurt, and then they grow and never look back. There are other merchant advance providers who do not see what they do as a service but instead see it as a chance to make money, even if it ends up hurting their clients. So here are some things to look out for before you sign any merchant advance contract.

How does the company handle “top-ups” or “re-advances”?

As a small business owner, you might need multiple merchant advances over time. These cash boosts can help you manage growth or get through seasonal dry spots in your year. If you haven’t paid off your first advance but need to take out more, some companies will make you refinance the balance that you have as well as taking out the new loan. So you end up paying a fee on what you still owe – even though you paid that fee when you took the advance in the first place. We only charge a fee on the basis of what you are taking out at the re-advance – not rolling it into one big refinance and jacking up the fees.

Watch out for automatic re-advances.

Financing can be a real boon for your business. However, if it comes (along with associated fees) at times when you don’t need it (or don’t want it), that can become a real hassle. Some companies provide re-advances automatically when you have paid down some of your advance, and the terms are inside the small print of your contract – but the company often does not point those out to you, leaving it to you to read all of the terms and conditions. These re-advances often come with a higher interest rate or percentage cost than the first advance. So you end up owing more and more money instead of seeing the advance get you to where you need to go.

Don’t deal with companies that delay your sales revenue.

Daily cash flow is vital to a small business. If you have a great weekend, your shelves will be dwindling, and you will need to restock. Any delay in getting the cash from those sales can hurt you down the line – and will frustrate you. Some merchant advance providers make you open an escrow account through a third party. Your sales go in there, and then you get your share (less the agreed payment) several days later. Other companies provide “split settlement” services, in which the credit card company send you your portion directly – but there is still a delay in the administration. Make sure that the company you choose does not make you wait for your money.

How can you avoid these problems?

First, make sure that the company you are dealing with is reputable and ethical. Amansad Financial has a sterling reputation for ethics – including accreditation from the Better Business Bureau. Clients do have questions and concerns from time to time – but we resolve them, and we put the customer first. That is how we have built up the considerable referral business that we have.

Second, ask every question that you have. You need to know about the company’s policy about re-advances, and how payments go out. You should not accept any delay in receiving your money – do not accept any split settlement or escrow arrangements. Reputable companies will not ask you to do this. It is your money, and you deserve to receive it as soon as you make it. Are you concerned about the numbers in the document? Maybe you want to adjust the advance amount or the payment percentage rate. You’re the client – so you ask the questions. Going in informed is the best way to get the best deal for your business.

Most merchant advance companies are reputable – but there are some companies out there that are spoiling the business for everyone else. We got into this business to help small companies grow and to help people who wanted to pursue their dreams find the financing that they need to take that dream a step closer to reality. We look forward to working with you – but no matter which company you eventually use, make sure that you use the information in this article to guide you in your decision.

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