What’s the difference between a merchant cash advance and factoring?

A merchant cash advance and factoring both provide working capital to businesses but operate very differently. A merchant cash advance is a lump-sum payment based on the business’s average monthly or daily credit card or debit card sales. The repayment on the advance is automatically deducted from the business’s future credit and debit card sales and the repayment amount is dependent on the volume of the sales.

Factoring, on the other hand, is when a business sells its unpaid invoices to a lender for immediate cash. With factoring, the business receives a percentage of the total invoice amount upfront and then repays the lender after the invoices have been paid by the customer.

Is it possible to get startup business loans with no credit check?

Yes, depending on the lender, it may be possible to get a startup business loan with no credit check. Some lenders may offer small business loans with no credit check, but they often come with much higher interest rates than loans with a credit check. Make sure to weigh your options and look into the terms and conditions of the loan before making a decision.

What are the best merchant cash advance companies to use if I have bad credit?

Unfortunately, it’s very difficult for those with bad credit to receive a merchant cash advance, but it can be done. Most companies require good credit to access this form of funding; however, some companies specialize in providing financing options to small businesses with bad credit. Consider companies like National Funding and Reliant Funding

Can I take out a second merchant cash advance if I already have one?

Yes, you can take out a second merchant cash advance if you already have one. However, consider the implications of having two cash advances outstanding at the same time and the effect it could have on your business. Depending on the terms of your advance and the lender's policies, you may be subject to additional fees and interest.

About the Author

Christopher Murray

Christopher Murray

Personal Finance Expert

Christopher Murray is a professional personal finance and sustainability writer and editor who enjoys writing about everything from budgeting and saving to unique investing options like SRI and cryptocurrency.

More about me

Related Articles

Show More