In a previous post, I wrote about how easy it is to qualify for a merchant advance. All you really need to begin the process is to provide 12 months of your sales history – for retailers it’s easiest to provide credit/debit card processor statements. For B2B companies we ask for monthly or quarterly GST/HST submissions. Merchant Advance financing is based on the sales history of the business rather than the personal credit history of the business owner so approval rates are very high. Banks typically turn down 8 of 10 applications for small business loans whereas almost 9 of 10 applications for a merchant advance are approved. Another reason a merchant advance might be right for your business is the simplicity of the application process.
#2 Reason a merchant advance might be right for your business – The application process
I did a quick search “business loan applications” and found the average application is 8 pages long with about 150 fields to complete. There’s also a website that provides “20 tips for a successful business loan application”. 20 tips? Are you kidding?.
Applying for a small business loan at a traditional commercial lender – the bank – can sometimes be a long, drawn out process. Phone calls, in person meetings, follow up phone calls and more meetings can take days – even weeks just to apply. All that work just to apply. To make matters worse, chances are you’ll probably be declined for the loan.
A merchant advance application is simple – one page. Your business name and address, a couple supplier references, a landlord reference and basic personal information is all that is required. Include 6 months of bank statements and proof of your sales history and you can usually get an answer the same day. Once approved we sign you up with a pre authorized debit and send you your money. The entire process from application to getting funds in your account is usually 2 business days . Repeat customers can get re-financed the same day.
You can download an application here.Merchant Advance Application 2013
So, if you’re looking for a fast and simple alternative to a bank loan for your business check out a merchant advance.
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.