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Merchant funding has become an invaluable financial tool for businesses of all sizes, providing them with access to much-needed capital to support growth and expansion. Unlike traditional bank loans, merchant funding offers a range of benefits that make it an attractive option for business owners.
In this blog post, we’ll explore the 7 main benefits of merchant funding and how it can be used to help your business thrive. But, before we get started, here’s a quick intro to how merchant finance works.
Merchant funding is a financial arrangement where businesses, particularly those who take payments via credit card (retail, restaurants, ecommerce, etc.), access cash in advance.
The lender provides you with a loan, then takes a percentage (agreed in advance) of your card payments to cover the loan and any interest. This is a great way for you to grow your business, especially if your payments are relatively seasonal or inconsistent, as repayments come directly from your card machine as and when they’re made.
Now that you understand merchant funding a little better, here’s 7 key benefits of this unique facility:
One of the most significant benefits of merchant funding is the speed at which your business can access the capital it needs.
Traditional loans can involve a lengthy application process, credit checks, and collateral requirements.
In contrast, merchant funding options like merchant cash advances and revenue-based financing offer a streamlined application process, with funds often disbursed within days. This rapid access to capital is crucial if you’re facing unexpected expenses or are looking to seize time-sensitive opportunities.
Merchant funding offers flexibility in repayment that traditional loans often can’t match.
Instead of fixed monthly payments, repayment is tied to your daily credit card sales or revenue, making it easier to manage during slower months. This flexibility allows your business to adapt to fluctuations in cash flow without the stress of meeting rigid repayment schedules.
Unlike many traditional loans that require collateral, merchant funding is typically unsecured.
This means you don’t have to put your assets on the line to secure the financing you need. Instead, your funding provider evaluates your business’s credit card sales, revenue, and overall health to determine eligibility and terms.
When you apply for traditional loans, your personal credit score can take a hit due to credit inquiries.
On the other hand, with merchant funding, the evaluation is primarily based on your business’ performance, so there’s no impact on your personal credit. This separation between personal and business finances can be invaluable for entrepreneurs looking to protect their creditworthiness.
Merchant funding is incredibly versatile when it comes to how you can use the capital.
Whether you need to expand your product line, renovate your storefront, invest in marketing campaigns, or cover unexpected expenses, merchant funding gives you the freedom to allocate the funds where they will have the most significant impact on your business.
Securing a traditional bank loan can be a challenge for small businesses, especially those with limited credit history or lower credit scores.
Merchant funding providers often have higher approval rates because they focus on your business’ potential and performance rather than just your credit score. This inclusivity makes it an accessible financing option for a wide range of businesses.
Successfully repaying a merchant funding arrangement can lead to a positive relationship with your funding provider.
As you consistently meet your repayment terms, you may become eligible for larger funding amounts and more favourable terms in the future. This can be a valuable asset as your business continues to grow.
At Jones & Co, we’re specialists in finding unique solutions to your ongoing funding issues. It’s our mission to inject the human aspect back into business loans.
Whether you need quick access to capital, or are looking for flexible repayment terms, merchant funding may well be perfect for your business.
If you’re looking to invest and feel that this might be right for you, don’t hesitate to get in touch with our friendly team of business finance specialists today.
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