What They Don’t Tell You About Merchant Cash Advance

Cost of Convenience

Nothing is as good as it seems, including business loan terms. When there are countless benefits to one thing, there’s a few drawbacks as well including:

• Raise in Rates: Instead of an interest rate, MCAs use a factor rate, typically ranging from 1.1 to 1.5. Rates always change in value and never remain constant. Factor rates make it difficult for borrowers to understand the true cost of a loan which is best understood as an interest rate. Converting a factor rate to an interest rate can be tricky, most borrowers will be surprised to learn the trust cost of their loans is 50% or higher!
• Finite Flexibility: MCAs often come with rigid repayment terms, leaving little to no room for negotiation or adjustment if your business experiences financial challenges.
• Layers of Lending: Borrowers using MCAs often find themselves in a position where they need to access another MCA to pay back the first loan. This cycle tends to repeat itself, putting borrowers in a position they find hard to escape.

Game-Changing Capital Access

When businesses are struggling to maintain everyday operations, they’re in need of cash fast. With the majority of loans, this cannot be accommodated. MCA loans can help but have many drawbacks that accompany the benefits. Luckily, a superior alternative exists with a Business Line of Credit. This is what a business line of credit has to offer with Accord:

• Flexible Funds: A Line of Credit allows you quick access to capital when you need it. Lines of Credit are flexible, in which you can repay and withdrawal any amount upon agreement at any time.
• Transparent Terms: With a business line of credit, you know exactly what you signed up for. Terms are straight forward, easy to understand, and agreed upon before executing the contract.
• Optimized Liquidity: Not only is the capital flexible, but it’s secured by business assets for collateral. As available business assets increase, your line can be increased.

Time to Get Involved

Even though MCA loans are not always optimal, there are times when it’s an efficient option. These times include:

• Seasonal Slowdown: It’s critical for seasonal businesses to be prepared for the fluctuating cash flow periods that come with the industry. By having extra capital throughout the off season, it allows businesses not to lose momentum and stay ahead of the market.
• Rapid Relief: Provides a rescue option for immediate repairs, replacements, or emergencies that arise.

Where Accord Comes into Play

Merchant Cash Advance loans might seem like a good option for businesses in need of quick capital. A short application process, rapid approval, and speedy funds disbursement appear ideal for addressing urgent financial needs. With anything in life, if it seems too good to be true, it probably is.

It’s crucial for businesses to fully understand the pros and cons of a financial product. Despite the benefits, MCAs provide little clarity on the actual costs and often put borrowers on a lending cycle they find hard to escape.

Skip the hassle and choose a finance product with straightforward terms and transparent costs while still providing simplified access to capital.

At Accord Financial, our commitment is to assist businesses in navigating their financing options judiciously, offering valuable insights, expert guidance, and customized solutions aimed at fostering sustainable growth and ensuring financial success.

Reach out today to discuss your business needs and gain a clear understanding of the financing options available before signing on the dotted line.