Digital payments, facilitated via card machines, are the future of business transactions and merchant advances are a new financial product that allow traders to repay their loans with each card payment. The use of physical currency, falling out of fashion even before the coronavirus pandemic, decreased in 2020 and it seems likely that digital transactions will continue to overtake cash payments in the future.

Merchant loans, better suited to the current circumstances than traditional business loans, provide business owners with the funds that they need to operate and can be repaid when sales are being made via card machine.

What Is The Difference Between A Merchant Loan and A Business Loan?

The financial industry, providing services to commercial entities, offer secure or unsecured loans and those who borrow funds agree to repay what is owed with interest. Banks, who provide business loans, require their customers to provide collateral in the form of personal or business assets and taking out such loans can be a risky venture for small businesses. Those who take out businesses loans or merchant cash advances will become indebted to the financial services provider and shall pay interest on monies owed but merchant loans, in contrast to business loans, are only repaid when the loan recipient is trading.

Should Small Businesses Apply For Merchant Cash Advances?

Small business owners, unable to secure loans from traditional sources, may benefit from alternative loans that are better suited to traders who operate on a more modest scale. Merchant loans, a type of alternative financial product, provide small businesses with the cash injection that they need to begin trading while securing a different arrangement with lenders than is offered by traditional sources. Traders repay the loan as they earn, with a percentage of the money received via card payments being subtracted by the lender, which makes life easier for businesses who experience peaks and troughs in their sales.

Who is eligible for alternative financial services?

Business cash advances, available from alternative financial service providers such as MoneyGiant, should be available to commercial enterprises that earn £5000 per month. Loans are repaid via a fixed percentage of card transactions and applicants, if eligible, should receive their business cash advances within as little as 48 hours of being accepted.