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Why It Makes Sense To Sell And Not Borrow

We’ll admit it. At first glance, the title of today’s blog may appear odd. Isn’t it obvious that selling something is more profitable than borrowing? But then again, how does selling work as the antithesis to borrowing? What exactly is the correlation between the two terms here?

In the world of business financing, selling and borrowing make up the perfect descriptions of the difference between merchant cash advances and bank loans. Both are known ways to attain extra working capital for a business that has plans to grow. However, the two ways of getting business financing couldn’t be more diametrically opposed. Let’s take a look at those differences so that we can clarify why selling is more sensible than borrowing for business owners.

Business Loans = The Act Of Borrowing.

When you go to your bank in order to secure a business loan, you are asking to borrow the bank’s money. This isn’t new information. We’re sure that most people are well aware of that. As a result, it’s important that you prepare yourself to prove to your loan officer that you will be capable of paying the money back. You’ll most likely require collateral and a detailed business plan. And you’ll certainly have your credit history looked into.

If you’re successful in securing the loan, you will have an accruing interest rate attached to the amount of money you’re borrowing. You will be required to make minimum payments towards paying down that loan on a monthly basis. Each payment must be made by a specific due date. Your payments will go towards paying off your interest charges first and the principal balance second.

The more you pay towards the loan, the less interest you’ll pay over time. However, if you miss a payment, your credit score will be impacted, you may incur a late fee and your interest rate may even go up.

Merchant Cash Advances = The Act Of Selling.

With a merchant cash advance, you aren’t borrowing any money. In contrast, you are selling your future credit card and debit card transactions at a discount. In other words, you will be receiving a payment for the credit and debit sales that you will be making in the future. You will get that money in advance so that you may use it to put towards growing your business.

Because you have sold some of your future sales, you do not have any interest charges accruing on the money you receive. Instead, you pay a one-time fee for the ability to receive the advance. It doesn’t matter how long it takes you to repay the money, there are no additional charges added to the balance over time. The total amount of your repayment is the sum of your advance and your one-time fee. Payments are made automatically through a small percentage of each credit card and debit card transaction you process.

If sales are good, payments are made quicker. If sales are slow, payments are made slower. There is no repayment schedule, and therefore there is no such thing as being late with a payment. Your credit is not affected and no collateral is put at risk. Selling your future sales, therefore, can be seen as a much more sensible way to go about getting extra working capital for your business than borrowing money from a bank!

For more information about Synergy Merchants’ merchant cash advance program or to speak with one of our licensed funding specialists to get a free, no obligation quote, simply call Synergy Merchants at 1-877-718-2026 or email us at

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