Dispelling Myths About Merchant Cash Advances

With the status of today's tumultuous financial climate, it has become commonplace to find that business owners across Canada are hesitant to become involved in any type of “increased debt”. This interestingly has been communicated to Synergy Merchant Services on a number of occasions as an integral reason why some merchants are skeptical about merchant cash advance programs.

Ironically, the objective of a merchant cash advance is to not only to avoid debt but to increase a company's profits. It is important, therefore, to dispel the myths about merchant cash advances. While there are numerous misconceptions about such a program, today we will focus on a couple of the more prevalent ones.

Myth #1: The program must be a scam, no money can be interest free.

As our merchant funding specialists always discuss in detail with all of our clients, there is, of course, a cost to attaining a merchant cash advance. The benefit, however, to knowing this set fee upfront is the peace of mind in knowing that your balance will NEVER get higher due to an accruing interest rate. Unlike loans provided by traditional banks, your cash advance does not accumulate interest regardless of how long your payback period is.

Myth #2: The cost of the cash advance is unaffordable.

Synergy Merchant Services tailor makes each cash advance to each specific business to ensure that payments are always manageable. Firstly, we make a purchase of a merchant's future credit and debit transaction receivables at a discount. This is how a merchant attains the cash advance upfront. The payback includes the cost of the advance which is paid back at a rate determined by his or her ongoing credit and debit card receivables.

In the past, we have actually been asked if the upfront cost of the advance is due right away! And, of course, the answer is “absolutely not”. The main objective of a cash advance is to ensure that the client has the extra capital required to help his or her business succeed. Merchants have used such advances for renovations and upgrading, advertising or even paying off bills.

Naturally then, there would be no reason to automatically provide a business owner with another bill upon receiving the cash advance. The nature of our program is such that it allows for flexibility with payments. No payment is ever greater than what a business owner can afford as it made up of a specific percentage of the credit and debit transactions the business makes on a monthly basis.

No accruing interest rate. No set payback schedule. No worries.

The Synergy Merchant Services Blog will continue to explore more of the various myths and misconceptions about merchant cash advances in the coming weeks.