According to Merriam-Webster, “collateral” is defined as “property (such as securities) pledged by a borrower…
When discussing the virtues of Synergy Merchants’ merchant cash advance program, our funding specialists often list the quick turnaround times for Canadian business owners to receive their funding. Our application process is a quick and easy one – so much so that our clients generally get their money within 24 hours! But that’s something we will discuss further in our next blog. In today’s blog, we’d like to point out that the repayment process is often heralded as the program’s best feature!
Why is the repayment process the best part of our merchant cash advance program?
There is no timeline for repayment and there are no minimum payments that are required either. A merchant cash advance is repaid through a small percentage of a merchant’s credit card and debit card sales. Therefore, we only get paid when our clients get paid. If sales are going well, we get repaid quicker. If sales are slow, we get repaid slower. And if no sales are made, then we don’t get paid at all! Our program works specifically with the unique ups and downs of each business so no client is ever expected to pay back more than he/she can afford.
Discovering the real benefits of the repayment plan for our merchant cash advance program is achieved when you take a look at how different it is than traditional bank loan policies. Loan repayments require monthly minimum payments. There is no consideration, of course, for how well or how poorly a company may be performing at any given time.
It doesn’t matter what your financial situation is at the time the minimum payment is required – it must be paid. With that said, there are penalties when payments are not paid on time. They include late fees, a hit to your credit score and the potential for an increased interest rate. That means that the harder it is for you to make payments, the harder the bank will make it for you to make payments.
How do increased interest rates make bank loan repayments more difficult?
With higher interest rates, borrowers inevitably have to pay back a lot more over time than they originally intended. As well, their minimum monthly payments will often increase because they are required to, at the very least, cover the interest charges that were accrued over the previous month. Add late fees to that payment amount and you’re barely reducing any of your principal balance.
With a merchant cash advance, however, it’s important to remember that there are no interest rates. Instead, clients are charged one-time fees. That means that there is a specific, set amount that is charged on top of the amount of money that is advanced. That amount doesn’t grow over the course of time. There is never a late fee or penalty added to the sum that needs to be repaid because there is no such thing as being late!
As long as a client continues to process credit card and debit card transactions in his/her store, the merchant cash advance and one-time fee will automatically be paid back. The repayment process is so easy that clients don’t even have to think about it. There’s never a need to cut a cheque or process an email money transfer. Repayments are instantly made with each transaction. It’s that easy!