skip to Main Content

The merchant advance industry is gaining widespread popularity among the small business community in Canada as an alternative to a traditional bank loan. For those of you unfamiliar with the service, a merchant advance provides a lump sum amount that is repaid on a daily basis using a small percentage of sales. Daily payments ebb and flow with sales trends of the business and repayment typically takes 7-9 months.  A merchant advance is intended for short term opportunities or emergencies (inventory, renovations, taxes) and is not intended to be used as an alternative to long term debt.

Compared to a bank loan, a merchant advance is expensive. However, if you believe time is money, then a merchant advance can be a very practical option for your business.

Why a merchant advance might be right for your business

#1 Reason – Qualification criteria

The biggest advantage a merchant advance has over a traditional bank loan is that approval is based on the sales history of the business and not the personal credit history of the business owner.

In order to qualify for financing with a merchant advance, your business needs to have been open for 12 months (most banks require 5 yrs), has 12 months remaining on a lease, and you can provide proof of sales history (credit/debit card processor statements or GST submissions)

In order to qualify for a bank loan you need a lot more – and if time is money, the list below will cost you thousands of dollars.

small business loan versus merchant advance

A merchant advance is not a good long term solution for most business owners but for those looking for a short term injection of working capital to take advantage of an opportunity or to get over a short term cash flow crunch, it can be a convenient alternative to the bank.

This Post Has 3 Comments
  1. I seldom drop remarks, but i did a few searching and wound up here Small Business Loan vs Merchant Advance.
    And I actually do have a couple of questions for you if it’s allright.
    Is it just me or does it give the impression like a few of the comments look
    like they are coming from brain dead people?
    😛 And, if you are writing on additional online sites, I’d like to follow everything fresh you
    have to post. Could you list of all of all your community pages
    like your Facebook page, twitter feed, or linkedin profile?

  2. Yes, I totally agree with what you said. I believe that time is money when you have a business. I think that it is definitely practical to get merchant advance. Thanks for sharing this article.

Leave a Reply

Your email address will not be published. Required fields are marked *

Back To Top