Finance

How A Merchant Cash Advance Is Different from A Business Loan

Small Businesses need credit to run and grow their business. However, getting credit has always been difficult for the small businesses as the traditional lenders demand collaterals like home and business property papers which are seldom available for small businesses, also the traditional businesses take a lot of time to process business loans, which often takes weeks or even months which makes the entire purpose of taking a business loan useless.

In order to help small businesses get access to business loans, the new age digital lenders came to picture and introduced the new age products which helped small businesses get easy access to business loans. One such product which has been of help especially to the retail shops, restaurants and other businesses where consumers walk-in for buying products is the Merchant Cash Advance and here is how the Merchant Cash Advance is different from a normal Business Loan.

  • Unsecured

While a standard business loan offered by the traditional lenders is a secured loans and needs the small businesses to submit collaterals against which the lenders underwrite the business loans. A Merchant Cash Advance is completely unsecured and is underwritten against the card swipe machine or payment wallet transactions which are directly the business transactions.

  • Faster Processing

The standard business loans are based on collaterals and take a lot of time in processing as it needs a lot of time for evaluations and on the other hand the Merchant Cash Advance is an express fast business loan product which is offered by the digital lenders like Indifi and can be availed by the small businesses by filling a quick and simple online form, the merchant cash advance is processed as quickly as within 24 hours. The digital lenders like Indifi evaluate the business transactions by fetching the transaction data from card swipe machines based on partnerships with the leading machine providers or by reading the bank statements, both of which are done in real time via machine learning.

  • Flexible Repayments

The standard business loans have a fixed repayment schedule which is built on EMIs and one has to pay in equal monthly installments despite the fact that business is never the same in any two given months which often results in a lot of pressure for the small businesses. The Merchant Cash Advance on the other hand offers complete flexibility as the small businesses have freedom to link the repayments to business transactions and using this the business loans pay for themselves with the customer transactions without having to worry about regular installments. The small businesses may also choose to repay in monthly, fortnightly or weekly installments.

  • No Branch Visits

A Merchant Cash Advance offered by the leading digital lenders like Indifi is a completely online product where a small business fills the loan application online and is not required to visit any branch office or any other location for any sort of verification or processing. A standard business loan on the other hand requires the small businesses to have multiple visits to the branches of lenders and it results in a lot of time wastage which could have been invested in the business itself.

  • Paperless

The traditional business loans consume a lot of paperwork as all the business documents and collaterals are required to be submitted in to the lender and this accompanied by a lot of other papers makes the documentation a very lengthy and time consuming process. Merchant Cash Advance on the other hand is a paperless product which requires the small businesses to submit all details online and even the verification is done using the modern methods like e-KYC

A Merchant Cash Advance hence should be the product of choice and preference for all small businesses who have accept payments from the customers using payment gateways or the card swipe machines, it not just helps the businesses save on time and get a flexible business loan that is directly linked to the business transactions but also helps them fulfill their business needs quickly as the digital lenders like Indifi offer fast small business loans based on merchant cash advance up to INR 50 Lacs as quickly as under 24 hours.