Merchant Cash Advance VS Small Business Insurance

Along with the increased proliferation of small businesses there has been an increase in the need for financing. To meet this need, financial services have been provided by many lending companies and financial institutions. The best thing about the huge competition on the part of these lenders is that they are constantly inventing ways to make things better and better for entrepreneurs, coming up with innovative solutions. There are two financial services this article attempts to consider and they are the small business insurance versus the merchant cash advance.

In the past, traditional small business insurances were the solution to an entrepreneur’s need for funds. Today, many forms of financing have evolved into more complex models that have incorporated ease and speed of acquisition. Merchant cash advance is one such innovation in financial services. Let’s take a look at the features of each so that we can distinguish the right source of money for our financial and business needs.

One of the common requirements put forward when applying for a small business insurance is that the potential borrower has a good credit history and that the business has to have been in business for a certain number of years. With most banks, you may have to put up your physical assets as collateral in order to get your desired small business insurance. The majority of applications for such traditional means of financing have a higher probability of being rejected. In the application process, submission of papers alone may take 1-4 weeks. If you have a good credit standing and are approved for a small business insurance, it may take 4 to 8 weeks before your money is released. Payment terms are made on a fixed monthly basis and failure to comply with this may result in small business insurance default.

On the other hand, Merchant Cash Advance boasts an incredible 90% and a higher approval rate as the lending company does not assess the borrower’s credit history but assesses the company’s ability to purchase credit card sales in the future. With fewer requirements to meet, the application process is much faster than that of getting a small business insurance and within 24 to 72 hours on average, the applicant will already know the response of the lending company. Once approved, funds can be made available in as little as seven days. Unlike small business insurances, the merchant cash advance is repaid with a percentage of future credit card sales until the amount borrowed is repaid in full.

By comparison, merchant cash advance is clearly superior to small business cash advance in terms of ease and speed of acquisition.