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Understanding the Differences Between an MCA and A Bank Loan

One of the biggest issues small- and medium-sized business owners face is getting access to capital or cash they need for improvements, repairs, expansions, and more. When most people think about borrowing money for a business, they think of a traditional business loan. For many years, this was the only option available to business owners in Victoria who needed access to cash for whatever reason they needed it. In recent years, a new form of lending called a merchant cash advance (MCA) has increased in popularity, offering a different way for business owners to get access to the cash they need.

 

Traditional Business Loans

 

For a traditional business loan, business owners must go to a bank and apply for said loan. To qualify, a business owner will likely need very good credit or they will not be approved for a loan. It is also likely that the business owner will need to provide a form of collateral to use to secure the payment. If you meet all the requirements for a business loan, you may be given strict terms as to what and how these funds can be used. Repayment of a business loan happens monthly, whereby you pay a portion of the principal amount of the loan back, with some interest. This payment will be due at the same time every month, regardless of how well or poorly your revenue stream is faring.

 

Merchant Cash Advances 

An MCA is a lot different than a traditional business loan. Lenders like Canadian Merchant Cash Advance are not banks, they are a lending company that is structured differently. An MCA can be obtained entirely online. The application process is short and simple. With an MCA, you do not have to have perfect credit to qualify, many people with fair credit can easily obtain a cash advance from a lender like CMCA. There are also no collateral requirements, which provides peace of mind for many business owners. Businesses that have been in operation for more than 6 months are eligible. You can obtain as much as $50,000 which, unlike a traditional bank loan, can be used for any purpose. Approval can be gained in as little as 24-hours.

Another key difference between an MCA and a traditional business loan is how money is repaid. With an MCA, the balance is paid in conjunction with incoming revenue. Essentially, a portion of each payment transaction will go towards repaying the amount borrowed. This means that repayment is tied to how well the business does.

 

Verdict

 Given the unstable nature of Canadian and world economy, tying oneself to a long-term business loan can be a very daunting thing to undertake. This is why so many business owners are using the MCA as opposed to a traditional business loan. The terms are far fairer and those with less-than-perfect credit are not denied access to the cash they need to make improvements or changes to their business. You can obtain the cash you need quickly and easily and repayment is tied to the revenue your business brings in. For the small- or medium-sized business owner, looking for a flexible, affordable, and easy way to obtain the cash they need, the MCA is far and away the best option available.

 

 

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