Don't Confuse Merchant Cash Advances with Payday Loans

With the credit crisis reaching critical mass, traditional lending sources are raising the bar and tightening the purse strings. And despite the Feds revealing that they may create a collection of loans with insanely low rates, private banks are reluctant to follow suit. The merchant cash advance has emerged as a promising avenue for business owners looking for venture capital funding. Some dismiss the notion as “another payday loan.” But an MCA is far from it.

Payday Loans are for Suckers
Even the seniors know it. An article from the American Association of Retired Persons (AARP) sums it up quite nicely: “A payday loan costs at least ten times as much as a small loan from a traditional bank. You may end up paying an APR of 300%, 400% or even 1,000%.” And depending on how much business cash it will take to get your start-up up and running, you could easily be talking tens of thousands of dollars in interest alone.

If your business relies on invoice payments or accounts receivables as a part of cash flow, there’s a better solution. Particularly if your high-dollar customers take 60 or 90 days to pay.

Merchant Cash Advance: Sell--Don’t Borrow
Remove the traditional banks from the equation. Forget the payday loan. You can sell your future invoices for cash right now and not pay a cent in interest. Let a factoring company become the medium between you and your customers, leaving you with immediate cash to expand.