What is a Business Cash Advance?

top five reasons to get a cash advance

Like many other business owners, you've probably heard about merchant cash advance loans and wondered exactly what these commercial funding products are and how they came to exist. The birth of the merchant cash advance is directly related to acts of congress, in conjunction with the banking industry. Back in the late 1990's, congressional members began to lobby financial institutions to make home loans and business loans more accessible, with a heavy emphasis on mortgages.

In the years that followed, banks started to offer loan products with varying degrees of loosened applicant restrictions. Eventually, more debt instruments were put on the market and these included "stated income" and "interest only" home loans. Of course, this had a tremendous impact on the housing market, and home ownership rose to record levels. Small business loans were also readily available and easily accessible. However, by 2005, housing prices reached unstable and unsustainable levels, and by 2008 real property values fell steeply, leaving millions of homeowners with underwater mortgages.

The housing bubble burst, as a result, approximately $1 trillion in home loans, business loans, student loans, credit card lines, and a multitude of other loans went into default. The result was what now commonly called The Great Recession and its devastating impact completely changed the lending industry.

What is a Business Cash Advance?

One result of the national economic meltdown was a wave of new federal banking and lending regulations. Banks, left reeling with hundreds of billions of dollars in losses, were forced to keep more funds in their reserves. The new lending requirements not only had a negative impact on banks but also small businesses, which lost a significant amount of access to commercial capital.Innovative minds harnessed the power of technology and fused it with a few elements of traditional lending. The result was a new business loan product, the merchant cash advance. These products offer substantial advantages to small businesses, those being speed, low rates, flexible terms, and little paperwork and documentation.

Fast Business Cash Advance

Using the speed of the internet, business cash advance lenders provide access to commercial funding online, with simple application forms. Removed from the traditional, arduous process of small business lending are such things as tax returns, certified financial statements, collateral, and asset and liability disclosures. This means cash advance loan processing reduces the time to receive approval from weeks to just one to two days. The same also hold true for funding, which is reduced from several weeks or two to three months to less than a week in most cases.

Quick Merchant Cash Advance

Speed not only provides quick access to commercial funding, but with it comes the ability to keep operating costs low, savings that are passed-on to applicants. The best business cash advance lender options are competitive rates with flexible terms, making these loans superior in more ways than one. Without all the paperwork to process, costs are kept down for merchant lenders and these commercial funding entities can offer the best business cash advance fast, ranging from $5,000 to $500,000, all based upon an applicant's monthly credit card sales receipts.

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