How To Get Prepared for a Merchant Cash Advance Loan Application

Do you need access to more capital? Your business may be able to benefit from a merchant cash advance loan.

When you choose this type of financing, you can get funds quickly and without the stringent application process, some loans demand. How does it work? You’re actually borrowing against your future credit card sales.

However, there are a few things you should do before approaching lenders. Below are the steps you should take to prepare for a merchant cash advance loan application.

Gather Bank Statements

Lenders generally want to see at least three months’ worth of bank statements. This is to help them evaluate your company’s cash flow. Bank statements are usually quite easy to get ahold of; you may receive yours in the mail or have access online to them. If you don’t have the statements on file or aren’t able to print them from your financial institution’s online system, you can always call and place a request. Most banks can mail out copies for a small fee.

Evaluate Your Operating History

Your operating history is another financial aspect lenders typically want to see. You should have three to four months of history on the account you plan to use. Make sure that your documentation is thorough and you have answers for any questions the loan officer may have. It’s alright if your operating history is limited as long as you can show that you’re capable of paying back an advance.

Research Potential Issues

Starting a business usually means some bumps in the road, and if you’re in need of capital, you may have had some financial struggles in the past. These aren’t necessarily deal-breakers, but they may make it more difficult to get favorable terms. Depending on how long you’ve been in business, you may fair better by applying for programs aimed at start-ups.

Look Into Incorporating

Are you incorporated? If not, you may not qualify for this type of loan.

Incorporating is vital for any business owner because it establishes the company as a separate legal entity with its own taxes, accounts, and liability. All credit card processing needs to be done in the business’s name.

Check Your Credit Card Volume Average

To be able to pay back an advance with interest, you need to be making a certain amount of profit. Established businesses are generally in good shape if they generate at least $5,000 in credit card sales each month. Start-ups are expected to have lower numbers at $2,000 a month.

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