Do you need funding for your business or commercial enterprise? Borrowers have options, including terms loans as well as an MCA, or merchant cash advance. Here is what you should know before borrowing:
Pros of Term Loans
The pros of traditional term loans, as you would find at a conventional bank, include low-interest rates for borrowers with good credit. Also, you can plan and predict the number of your loan payments with a term loan- which makes it easier to plan. Usually, this process is fairly fast and turnaround for your funds is swift.
Pros of a Merchant Cash Advance
One of the perks of an MCA is that you don’t necessarily need a good credit rating to be eligible for funds. Also, the cash advance is quite fast. Your payment for an MCA varies, and the payment amount goes down when your revenues are low. You won’t need collateral for a cash advance, either.
Cons of Term Loans
The downside to a term loan is that you will likely need good credit to qualify. You may also be required to provide some sort of collateral to secure the loan.
Cons of a Merchant Cash Advance
The cons of a cash advance are that the repayment terms vary which can make it hard to plan. Also, the financing may be higher than other funding options.
Term loans make the most sense when you are eligible for low-interest rates and when you are looking at making a big purchase for your business. These types of loans also are practical when you can choose the terms for repayment. As for an MCA, this seems most viable when you lack other funding sources or have patchy credit. Also, make sure that you are fully aware of the terms before making a merchant cash advance to fund your need.