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Are Business Grants Better Than Merchant Cash Advance?

   Monday, 23 October 2017 12:11 PBC Blog

Are Business Grants Better Than Merchant Cash Advance

A lot of business owners out there struggle with this question, that is, are business grants better than Merchant Cash Advance? The answer to this question is simplified in this article. Both business grants and Merchant Cash Advance are two types of funding options offered to small businesses that are in need of working capital. Both of these funding options allow businesses to expand operations, buy equipment, cope with seasonality, meet payroll, and much more. Although both of these financing choices can be utilized for the same purposes, they differ from each other in several ways.

This article compares both business grants with Merchant Cash Advance so that business owners can choose the right option for their business funding needs. Plus, they can get to know about the qualifications and the approval time for both of these kinds of financing options.


Read More:
Merchant Cash Advance: The Top Small Business Lenders to Fulfill Your Business Needs Today


Business grants


Small business grants (which you can read about
here) are just like regular loans, say a car loan or mortgage. They offer a particular amount of money to businesses, which is to be returned in regular and fixed payments.


Merchant Cash Advance


Merchant Cash Advance or MCA is not technically a loan. Rather, the providers of MCA give you an amount of cash in exchange for your future credit/debit card sales.


Business grants versus Merchant Cash Advance

·         Process: Business grants or business loans are a lump sum amount given to a business in return for a fixed monthly return. However, Merchant Cash Advance is a lump sum cash advance that is given to a business in exchange for a portion of the daily credit card receivables.

·         Maturity date: Business grants have a fixed maturity date, whereas the maturity date for a Merchant Cash Advance can vary depending on the credit card sales of the business each day.

·        Repayment amount and schedule: When it comes to repayment, the amount is fixed and based on the principal amount plus the interest in the case of business loans. The repayment schedule can be on a daily, weekly, or even monthly basis. However, a MCA has a variable repayment amount since it is based on the daily credit card receivables of the company. In this, the loan repayment schedule is on a daily basis.

·         Eligibility: In business loans, the primary qualifications are the personal credit score and the annual revenue of the business. On the flip side, the primary eligibility criteria for a Merchant Cash Advance are personal credit score and credit card sale history.

·        Access to funds: Business grants take a much longer time to give out funding to businesses as compared to Merchant Cash Advance, which can even give financing within a few hours.

·         Maximum loan amount: Business grants offer a maximum loan amount of 20% of the annual revenue, whereas Merchant Cash Advance offers the financing amount of 50% of the annual credit card sales.

 

Read More: Quick Guide to Choosing the Best Financing for Small Business


Thus, Merchant Cash Advance is surely better than business grants or business loans in general. Not only does it have a high and quick approval rate, but it also has minimal eligibility requirements and a simplified procedure.

 

We provide two highly accessible financing programs that can get your business the working capital it needs in days instead of months.

For a small business, obtaining a traditional loan today is a complex and difficult process. That’s where Premier Business Capital comes in. 

Merchant Cash AdvanceACH Loans 

 

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