Merchant Cash Advance Blog

Dump Truck Financing With Merchant Cash Advance

   Thursday, 21 December 2017 10:08 PBC Blog


Dump Truck Financing With Merchant Cash Advance

The construction industry is one of the most profitable industries in the United States. No wonder real estate companies seem to be having such a good time in the present moment. Lots of persons have often looked forward to being a part of this hugely successful industry. Because of this, some have started small dump truck businesses in order to render services in the area of transporting loose construction materials such as sand, gravel, and demolition waste to and from construction sites. The construction industry, however, is far from being a bed of roses. This means that every now and then small dump truck companies often find the need to secure dump truck financing.

At first glance, this should prove to be easy but the question of obtaining business funding from commercial banks has become too complex. As the years go by it becomes more and more difficult for small businesses to secure funds.

Why are small businesses looking away from traditional sources of business funding?

Stringent regulations on the part of the commercial banks add to the difficulty. For instance, it is well known that commercial banks would not necessarily offer loans of less than $50000, meaning that small businesses that might typically need loans below this amount are denied access to business funds. In addition, banks often demand collaterals which the small business owners are unable to produce.

That is even if one does not consider the bitter experience businesses go through when loans are not repaid at the specified time. In our present time, small businesses are beginning to realize that if they are to survive they must look beyond the traditional financing institutions, especially when seeking such things as dump truck financing. After all, banks might even be less willing to offer loans to small construction service companies who are seeking to invest in such high-cost machinery like dump trucks.

Turning from commercial banks, small businesses have ventured into alternative sources of funding some of which have proved to be only a little better than commercial banks. One of the commonest alternative sources of business funding which small business have explored is microlending. But it also happens that microlenders do not issue business loans that are in the excess of $35000.

Moreover, they almost always require the same rigorous documentation procedures that one often associated with commercial banks. From requesting for a detailed description of what the loan is to be used for to asking for detailed financial statements the list of what is demanded is almost endless. However, they differ from commercial banks in that they do not request collaterals; nor do they require that a business should have good credit before loans are issued.

Most of the things that are true for microlenders are also true for other sources such as the business line of credit, online lending and the rest. But in order to obtain easy and quick dump truck financing, other sources such as merchant cash advance has to be explored.

Introducing merchant cash advance as an alternative to other sources of business funding

A merchant cash advance allows a business owner whose business fulfills a large portion of its face to face business transactions using credit cards. From a technical perspective, a merchant cash advance is not a loan, even though most persons might erroneously regard it as one—perhaps because it is known to serve the same vital purpose of helping a business to expand, shop for new pieces of equipment, and even pay workers. To be precise, a merchant cash advance is a lump sum of money given to a business based on the future receivables or credit card sales of the business. The merchant which is the business often signs a merchant agreement with the merchant cash provider which enables the stipulated amount of the merchant`s credit sales to be transferred to the merchant provider on a daily basis—or at any other interval which both parties agree to. In order to determine what fraction of the merchant's daily credit sales should be withheld, the merchant providers evaluate the risks and try to determine whether the dump truck business, in this case, can repay the dump truck financing.  Merchant providers are bent on recouping their financial investments in the shortest possible time. In most cases, they demand that the advance is paid back in less than 18 months in stark contrast to what obtains with commercial bank loans.


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Reasons Why Merchant Cash Might Be the Best Option for Your Dump Truck Business

Quite a number of business people have objected to having merchant cash advance and at first, their reasons might appear somewhat plausible until one decides to take a closer look at some of the facts on the ground. First, it is often said that a merchant cash advance is arguably the most expensive financial service on the planet at present; although this is quite an exaggeration—a malicious one at that—it is true that merchant cash advances are more expensive than, say, commercial bank loans. Annual percentage rates for dump truck financing through merchant cash advance are also known to be higher than those of loans from most traditional financial institutions. But it often seems to escape the minds of these critics that a merchant cash advance, for one thing, is an unsecured loan, so to speak. And being an unsecured loan, the merchant cash advance provider stands at a great risk of losing his investment if the business suffers from unprecedented events such as war or natural disasters and as a result, fails. Since the risk is quite high, merchant providers are simply being pragmatic by opting for high returns on such risky investments—unsecured loans.

It is also said that a merchant cash advance does not help build credit since it is not a loan. The implication is that no matter how well a business does to repay the advance in real time, payment histories will not typically send to credit card bureaus. But merchant cash advance providers accept dump truck firms seeking dump truck financing even though their credit scores are poor—below the usual 650 or so set by commercial banks. In addition, the chances of obtaining a merchant cash advance are much higher than can be expected of commercial bank loans. For instance, it is well known that securing a loan will often come after several months of processing which excludes the several weeks before a feedback is issued on the application in the first place. But in the case of merchant cash advance, it only takes a few business days for a decision to be made on the application. And once this decision is in favor of the merchant, it takes a couple of days as well for the cash to be delivered. There have been several instances where the entire process took less than 1 week to complete. Surely then, a merchant cash advance is the number one choice for small businesses that are urgently in need of cash. After all, dump truck financing from merchant providers could be as large as $250000 depending on the volume of credit sales the firm processes.


Read More: How Businesses are Obtaining Their Machinery Finance

How a Merchant Cash advance Works

It is important at this point that one understands how a merchant cash advance works because doing so will help a business owner to better appreciate the simplicity of merchant cash advance transactions. The first thing one needs to know is that merchant cash providers are in the business to make a profit and that being the case; the actual amount paid back by the merchant is higher than the advance received.  According to a number of merchant cash advance providers, a business often pays around 20 to 40 percent of the advance it received.( this is not, however, an interest). This percentage is usually represented as a factor rate with 20 percent meaning a factor rate of 1.2, and 40 percent standing for a factor rate of 1.4. There is, however, a huge difference between the holdback amounts which is the amount the business pays to the merchant on a daily basis and the repayment amount for the entire advance. For instance, a holdback amount of 15% means that 15% of the daily credit sales will be remitted to the merchant provider in order to offset the dump truck financing received by our hypothetical dump truck company; while a repayment amount of 30% means the merchant will pay 30%  more than it borrowed over the entire period.


In all, merchant cash advance has always come to the rescue of small businesses when it mattered most. Business owners are beginning to see the possibilities that come with a merchant cash advance—quick cash in a short period of time. So dump truck firms seeking dump truck financing to keep their companies afloat especially in the highly competitive construction industry will find that a merchant cash advance is about all that they need. So wouldn't you make the call today to get quick ready Merchant Cash advance funds for your dump truck business?


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. 

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