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What’s the Difference Between a Term Loan and a Merchant Cash Advance?

Term loans and merchant cash advance are very much important because these two financing options provide capital to business. Even though these two financial options are indispensible to business, each possesses its sets of pros and cons. You can take advantage of these two financial options from Canada’s cash advance company.

The quest for business finding can be a very difficult process because it is full of confusing jargon and fine print. Some of it is unnecessary and superfluous and the other terms possess exact meaning which is important for you to grasp in order to explore the funding options of your business. You can always seek the help of Canada’s cash advance company in case of any financial issues.

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What is a Term Loan?

Term loans are the small business loans which are offered by the banks for years. Term loans can be obtained from Canada’s cash advance company. Whenever one thinks of a business loan, he or she is thinking about a term loan. Term loans provide straightforward and traditional funding to the small business owners by providing them with a lump sum. The amount is paid off along with an interest and a predetermined fixed amount which is paid on a monthly basis. The term loans provide unique terms. With larger loan amounts, longer repayment terms and lower APRs the term loans are ideal for the small businesses.

Term loans are useful if your business is able to qualify for a term loan. Term loans are considered to be the most difficult type of business loans and certain criteria needs to be met in order to apply for a term loan. You need to be in business for at least 2 years, possess a personal credit score of at least 620 and generate annual revenue of at least $100,000.

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What is Merchant Cash Advance?  

Merchant cash advance is considered to be more of an advance payment and can be obtained from Canada’s cash advance company. The financing organizations which offer merchant cash advances consider the future credit card revenue of your business as assets. The financial organizations are willing to advance the business cash with the promise of a return in the form of the daily credit card revenues. Merchant cash advances can be repaid daily as the financing company intercepts before the credit card revenues reach the bank account.

It is very important to get an idea that the merchant cash advances are one of the most costly business funding options. The rates are usually expressed through decimals known as factor rates which change from 1.14 to 1.18. In order to figure out how expensive the merchant loan advance will be, you need to multiply the factor rate by the amount of money which has been borrowed. Merchant cash advances requirements are not very rigid and you can obtain these advances easily.

You need to be in business for a period of one year, have a personal credit score of 500 and the annual revenue should be around $50,000. Even though merchant cash advances are the most expensive funding options, they are needed because they serve as capital to businesses. You can opt for a merchant cash advance from Canada’s cash advance company. Catch more insights on Financial services and news here!