Getting a bank loan is not the only option available to people in need of cash. Neither is getting a high-interest payday loan from shady online lenders. There is the cash advance that is the alternative to short-term financial needs. Learn more about the different benefits of using this method to borrow money.
The Basics of Advancing Money
An advance allows for the withdrawal of cash from your credit line. The withdrawal limit is based on a certain percentage or the total amount of credit in your account. For each advance, there is a 3 to 5% fee based on the amount. Borrowers pay compound interest, making this withdrawal more expensive than some loans.
Withdraw this cash at an ATM or bank like a debit card transaction. However, this advance is a loan that must be repaid. Some people claim that receiving this money is convenient, but others claim that the fees make it an expensive long-term option.
The Benefits of Merchant Cash Advances
These advances are extended to merchant services. Business owners borrow merchant cash advances that work similarly to loans. However, they make repayments using the money that they earn on their credit card sales.
Qualifying to obtain an advance is easier than qualifying for a regular business loan. Borrowers do not need good credit, but they must have tools for credit card processing. They also need to show proof of stable credit card earnings. Any business owner who makes steady monthly sales will have no problems in repaying the money.
Completing the application for a merchant advance is less complicated. On average, it takes several hours or days to get approved. This is shorter than the few weeks or months that it takes to get a bank loan.
There are money advances available to both individuals and businesses. The process of withdrawing cash from a personal bank account is convenient yet expensive in the long run. For merchants, receiving an advance is simple and possible for any business to do regardless of credit. In general, this method is one of the fastest and easiest ways to borrow money.