How a cash advance can provide flexibility for your business
While cash advances to the merchant have been around for more than a decade, many homeowners still do not know how much this loan product can contribute to the growth of their small business. Unlike a traditional loan, a cash advance allows the company to use future sales for immediate access to funds.
How to get an advance on future credit card sales?
First, lenders get to know the company that submits a request and its liquidity. In particular, they look at certain data points that help them predict future business sales. Based on these statistics, they propose an amount that they believe respects the company’s ability to repay and provides many benefits.
To find out how much your business would be entitled to, calculate the average of your debit and credit card sales. If your monthly sales are close to $ 100,000, you could probably receive funds of about $ 100,000.
Unlike a loan, repayment of cash advances is variable and calculated daily based on card sales. Take the example of $ 100,000 at a rate of 10% (or a factor of 1.1).
- Amount of the advance: $ 100,000
- Amount to be repaid: $ 110,000
- Withholding rate: 10%
This means that 10% of your daily sales by debit and credit cards will be withheld until the full $ 110,000 refund. As payments fluctuate daily, the repayment period may vary from one advance to the next.
- Amount of debit and credit card sales for a given day: $ 250
- Amount collected for this day: 25 $
- Amount of debit and credit card sales for another day given: $ 0
- Amount collected for this other day: $ 0
Who can apply for a cash advance?
The Merchant Cash Advance program is ideal for many small businesses, especially those experiencing increases or decreases in sales depending on the time of year. The repayment structure facilitates liquidity management during periods of economic downturn.
To be eligible, Evolocity customers must meet the following five basic criteria:
- You have a company located in Canada.
- You have a valid commercial lease.
- You accept debit and credit cards.
- You have average monthly sales of $ 15,000.
- You have been in business for at least six months.
It is important to note that the merchant cash advance is one of the financing options for which it is very easy to have your file approved. However, lenders take a significant risk, which often makes the option more expensive than a typical business loan.
What are the advantages of the cash advance to the merchant?
In addition to the flexible repayment process, business owners choose the cash advance option for a number of reasons, including:
- The application process is quick and easy.
- Funds are deposited into your account within 48 hours of your file approval.
- Funds can be used for any commercial purpose.
- You can access your account online at any time for up-to-date information on your refund.
Cash Advance to Evolocity Merchant
Evolocity is one of the largest providers of cash advances in Canada. Visit evolocity.ca to learn more about cash advances and small business loans.
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