Payback Is A Sinch
One of the most puzzling things to a brand new client at Synergy Merchant Services is the method by which our merchant cash advances are paid back. In a world, where both consumers and business owners alike are so used to the concept of making monthly minimum payments towards paying down a balance, it is hard for some to grasp the concept of having no fixed repayment schedule.
Of course, our funding specialists are only too happy to explain the vast differences between the payback methods offered by Synergy and traditional banks. Let’s start first with what people are used to.
Paying back a bank loan means, of course, that interest will accrue on your outstanding balance. Therefore, with each payment, the amount that is being paid is broken up between paying off the interest and the principal balance. Interest, by the way, takes priority and payment is always designated towards paying off interest before your balance sees a decrease.
As time goes on, interest continues to accrue on this outstanding balance until another timely payment is made. If one wishes to pay off more of the principal balance, then he or she must obviously make a larger payment by the due date. If, on the other hand, payment is not made by the due date, a penalty ensues.
This will not only affect one’s credit score negatively as the payment will be considered past due, but a late fee is generally also charged as a result. In addition, more interest is heaped onto the balance, often causing greater financial stress on the borrower.
With a merchant cash advance, there is no such thing as a late payment. This is because of one of the program’s finest features. There is no fixed repayment schedule. Instead of a due date, payments are simply made through an automated process that sees a small percentage of a merchant’s credit and/or debit sales put towards the repayment of the cash advance.
Quite simply, a payment towards repaying the cash advance is only made when a sale is made in the merchant’s place of business. If no sale is made, then no payment is made either. This is never considered a late payment so there is no such thing as being behind on payments.
With no fixed repayment schedule, a merchant lives with the comfort of knowing that whether he or she takes six months or one year to repay the cash advance, the amount being paid back will remain the same.
No accruing interest rate. No late payments. No penalties. No kidding!