Small company operators in India face significant difficulties in obtaining capital for their various company operations. Due to a lack of collateral, exorbitant interest rates on business loans, and extensive paperwork requirements, businesses and startup owners are forced to seek other financing sources.
Compared to typical company loans, a merchant cash advance (MCA) has several advantages, including a higher approval rate, more flexible payback terms, and faster access to funding. However, few individuals are familiar with MCA.
What is Merchant Cash Advance?
The phrase indicates a cash advance loan on future credit and debit card swipes that small business owners can obtain from lenders. It is a comparatively recent source of finance for entrepreneurs. Although merchant cash advances have been accessible in the United States, Canada, and other industrialised countries for an extended period, they have only lately gained popularity in India as a quick and hassle-free technique of generating capital.
How Will It Work?
After you apply for and receive approval for an MCA, the lender offers you a flat payment. Automated debits subsequently repay the loan against the EDC machine from your credit or debit card sales. The payback time might be a minimum of 90 days or a maximum of 30 months, depending on the credit/debit card purchases.
The cash advance amount is determined by your typical monthly credit/debit card sales. Lenders offer credit card machine loans between 100% and 400% of your card sales volume. The lender will request your credit card sales statements for the previous three to six months to evaluate your eligibility. Continue reading “A loan against POS is one such alternative credit option available to small enterprises in India”