Home LoansCash Advances and Term Loans: The Key Differences  
Cash Advances and Term Loans: The Key Differences   

Cash Advances and Term Loans: The Key Differences  

Does the search for business funding seem intimidating to you? Do you want to know the key differences between a cash advance and a term loan? Where can you find a reliable and affordable MCA to apply for? This article will give answers to these questions.

Term Loans

These are small business loans offered by banks. Term loans offer larger loan amounts. Besides, they don’t offer higher APRs. The repayment terms are longer that’s the reason why they’re the preferred choice for many small business owners.

Merchant Cash Advances (MCAs)

When you get a merchant advance, you provide the future credit card revenue of your business as assets. Importantly, MCAs aren’t loans; they’re just a sale. So, your business gets cash with the promise of a return in the form of a percentage (a set percentage) of the daily credit card revenues of your business.

Be aware that the rates associated with MCAs are higher, but they’re really worth that. In fact, MCA providers don’t focus on your personal credit. Instead, they take into account your time in business, business type, and the average monthly credit card volume of your business.

To get easily approved for the best cash advance in the industry, turn to a trustworthy and experienced provider in the field. Look for a reputable alternative lender that provides simple application online, minimum of paperwork, fast approval, and offers no application fees or points.Search for a respectable funding provider that can offer larger advances than the competitors in the space.

A Term Loan vs. a Cash Advance

Now, let’s see what key differences exist between these two types of business funding:

  • Term loans are affordable yet difficult be eligible for, and cash advances are extremely accessible yet difficult to afford.
  • Term loans have been around for many years, and cash advances are new but have become a highly popular type of business financing. Today, many business owners choose an MCA over a traditional loan.
  • An MCA offers terms that aren’t usually fixed.As for a term loan, it’s usually paid back within a given period of time. If you fail to repay, you may end up with severe consequences causing even bankruptcy.
  • An MCA doesn’t require a personal guarantee or collateral. As to a term loan, it requires to provide collateral before the loan can be issued.
  • MCA processing can take just a few business days, and a term loan often takes weeks or even months before a loan application feedback is issued.
  • With an MCA, you have higher chances of getting approved, which can’t be said about a term loan.

If you need quick access to working capital toimprove cashflow, orbuy equipment and inventory, or pay for repairs, an MCA is the right business funding option to go for. However, you should make your final decision based on your business needs. In any case, it’s too important to turn to a true business funding expert in the field so to get the best deal for your business.

Author Bio: As an account executive, Michael Hollis has funded millions by using alternative fundingsolutions. His experience and extensive knowledge of the industry has made him a finance (or cash advance) expert at First American Merchant.

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