Merchant Cash Advance

Overview:

Payment through the card, be it debit or credit is gradually turning out to be the only mode, especially to the new generation. Usage of plastic money has many advantages; the primary being not carrying cash. In keeping with the trend, most establishments, big and small have enough Point of Sale (POS) machines to cater to the ever-increasing card swiping individuals.

Merchant Cash Advance Loan

The volume of swipes has spawned opportunities of Merchant Cash Advance to the entrepreneur with funds to run and expand his business. In turn, the lenders are also happy to extend Merchant Cash Advance Loan where the credits are short term with no issues of repayment due to the innovative mode of daily repayment.

Features of Merchant Cash Advance:

The installation of POS machine in your establishment is not only to facilitate cashless payments to the customers, but it also is a means for you to seek credit. You can use the fund as your working capital ensuring a healthy cash flow and achieve short term business growth.

Salient Features Merchant Cash Advance Business

Quantum

It is quite generous with the maximum up to Rs.1C depending on the value of your swipe transactions and monthly card settlement

Tenure

It is flexible with lenders and can range anything between 6 months and 12 months.

Amount Eligibility

The quantum of loan is dependent on the volume of your monthly card sales value. Some lenders determine your eligible amount up to 200% of the value. Higher your sales; higher is the eligibility amount of advance.

Paperless Process

Most Digital Lenders ensure hassle-free online application and loan processing.

Quick disbursal

Approval and disbursal are in a double quick time of 3 days.

Eligibility Norms for Merchant Cash Advance:

The norms may vary in different lenders as to the volume and value of POS transactions; the guiding principles remain the same. Based on the basic parameters the eligibility norms can be described as:

  • The minimum Business operational history of 1 year.
  • POS usage of minimum of 6 months.
  • Minimum monthly card transactions starting from Rs.50K
  • ITR for 2 years if the turnover is over Rs.10L

A snapshot of applicable fees:

The lenders assure extreme transparency in dealing with Merchant Cash Advance Business. The applicable charges are not many and liberal.

  • Processing Charges: It is charged upfront by the lenders and is usually in the range of 2% of the loan amount.
  • Pre-payment Charges: Most lenders waive this charge and thus it is zero.
  • Others: There are no hidden charges whatsoever.

Merchant Cash Advance Accounting:

The repayment method of Merchant Cash Advance is very innovative. The lender partners with the POS vendor who is the service provider as well as the facilitator for account settlements. In other words the terminal provider not only facilitates the acceptance of card payments, but also processes the transactions for the entrepreneur. The lender by associating with the terminal vendor is privy to the transaction details as well as the volume and value.

The knowledge of the financials is mutually beneficial as you are sharing the business parameters with lender first hand and there is no need for your credit checks. Further, the movement of average monthly funds helps your lender to design an advance and repayment plan ideal for you.

Repayment of Merchant Cash Advance:

The method of repayment is daily deduction as a proportion of the revenue earned every day. It is one of the easiest funding solutions without going into the complicated procedure of repayments through EMI.

The process of repayment is directly through the POS machine transaction executed daily, removing a lot of hassle on your part.

Benefits of Merchant Cash Advance:

  • Rate of Interest: This form of advance attracts the most competitive rate of interest among other similar loans due to the ease and inherent security and seamless repayment procedure.
  • Flexible Finance: It is linked to the mode of repayment. Since the process of repayment is direct as a ratio of the revenue on any given day, they constantly move up and down depending on the earnings. In simple terms this can be translated as higher earnings results in higher repayments and lower, lowers the amount of repayment. Unlike fixed amount repayment, it is a great feature to enjoy as you need not be worried about defaults.
  • Hassle-Free Repayment: It can be termed as painless for you as the lender directly collaborates with the POS Vendor in collecting the repayment amount daily at the source without bothering you.
  • Freedom for Alternative Finance: It is one of the most important benefits as even with Merchant Cash Advance, you are in position to vie for other finance options for your business opening up a new line of credit simultaneously.

How to Apply Online for Merchant Cash Advance:

The lenders provide for a user-friendly digital platform to you for a seamless application process, which can be broken down into the following steps:

  • Invoke the Apply Now button.
  • Sign up and populate the relevant fields.
  • Upload the requisite documents in digital format.
  • Submit and expect the loan amount credited to your account in three days.

Documentation for Merchant Cash Advance:

The documentation process is very simple and there is no need for hard copies. You only need to upload digital copies of the sought documents.

An indicative list of documents. The actual list may be longer

KYC

Identity, Age, Address proof and PAN card through any valid document of the promoter and enterprise

Existence

Business registration proof

Financials

Bank statement of Current Account for 12 months

Card Settlement statements for 3 months

Returns

Relevant Tax returns for GST or VAT as the case may be.

Merchant Cash Advance FAQs:

1. Of what help is the Merchant Cash Advance to you?

You get easy access to funds and not worry about the repayment which is automatic on a daily basis.

2. Is there any collateral for the loan?

It is an unsecured loan and so the question of collateral does not arise.

3. What is the disadvantage of Merchant Cash Advance?

Since the advance quantum is determined by the card sales, your other modes of earning like cash is ignored.

4. How does your terminal vendor reduce your choice?

If your lender does not collaborate with your terminal vendor, then you do not receive the loan from the particular lender

5. How does Lendingkart process loans?

It is fully paperless and digital at Lendingkart