Small company operators in India face significant difficulties in obtaining capital for their various company operations. Due to a lack of collateral, exorbitant interest rates on business loans, and extensive paperwork requirements, businesses and startup owners are forced to seek other financing sources.
A loan against POS is one such alternative credit option available to small enterprises in India. Compared to typical company loans, a merchant cash advance (MCA) has several advantages, including a higher approval rate, more flexible payback terms, and faster access to funding. However, few individuals are familiar with MCA.
What is aMerchant Cash Advance?
The phrase indicates a cash advance loan on future credit and debit card swipes that small business owners can obtain from lenders. It is a comparatively recent source of finance for entrepreneurs. Although merchant cash advances have been accessible in the United States, Canada, and other industrialised countries for an extended period, they have only lately gained popularity in India as a quick and hassle-free technique of generating capital.
How Will It Work?
After you apply for and receive approval for an MCA, the lender offers you a flat payment. Automated debits subsequently repay the loan against the EDC machine from your credit or debit card sales. The payback time might be a minimum of 90 days or a maximum of 30 months, depending on the credit/debit card purchases.
The cash advance amount is determined by your typical monthly credit/debit card sales. Lenders offer credit card machine loans between 100% and 400% of your card sales volume. The lender will request your credit card sales statements for the previous three to six months to evaluate your eligibility.
Features ofMerchant Cash Advance
Here are some features that loan against swipe machine provide to small businesses:
Simple, No-hassle Application
Unlike typical credit card terminal loans from banks, merchant cash advances are relatively simple to apply for. You can obtain your cash within a week with little paperwork and quick qualifying. Indifi, for example, offers same-day clearance.
Amounts up to Rs. 25 lakhs
Traditional banks are not as lenient when it comes to swipe loan amounts—adding to it the masses of documents and evidence of credit score that you must present, which all add to the application's length. FlexiLoans, conversely, allows you to borrow up to Rs. 25 lakhs, based on your monthly card settlement and capacity to repay over 36 months.
No Collateral
Unlike traditional business cash advance loans, merchant cash advances do not need the submission of security such as real estate or other assets.
Rapid Funds Access
The great aspect of merchant cash advances is that you may obtain funds instantly without waiting for lengthy approval. Additionally, you may spend the funds received from merchant cash advances as you like because there are no limits on what you may or may not do.
Term LoanEligibility Criteria
We’ve designed our business loan eligibility criteria to be inclusive while ensuring responsible lending. To qualify for a FlexiLoans term loan for business, your business should meet the following requirements:
| Minimum Requirements | |
| Time in Business | 1 Year |
| Annual Revenue | ₹10 lakhs |
| Age | 21 to 65 |
| Credit Score | 700+ |
| Documents | Must have valid GST and business documents |
| Validly existing as a corporate entity | Required |
Our eligibility assessment takes into account various factors beyond traditional banking parameters, allowing more MSME term loan applicants to access formal credit. We evaluate your business holistically, considering business financials, transaction patterns, and industry potential.
Benefits of Merchant Cash Advance
While merchant advance loans are not appropriate for every company owner, they can be beneficial to some.
Flexible repayments
It depends on daily or weekly credit card sales for your company. The remittance mechanism is among the primary benefits of getting an MCA. A firm is obligated to make the specified payment with a standard term loan. This is regardless of whether its customers have paid their invoices or not.
Automated purchases are processed
When a POS loan is remitted, payments are deducted automatically from your company's accepted credit transactions. This eliminates the need for you to take time out of work to make the payments, and there is little risk of incurring late penalties. If you frequently fall behind on payments, it might be reassuring to know that your cash advance payment is being handled for you.
Funds are received expeditiously
When applying for merchant services loans with a bank, the procedure might take weeks or months to complete. If your firm needs immediate working capital, you generally cannot afford to go through a lengthy financing procedure just to discover that you are ineligible for a business loan. Funds are frequently available in less than a week with a loan against a POS machine, and many lenders like FlexiLoans may close disburse loan in less than 48 hours
No collateral is required
Even if you have assets, you may not be able or willing to pledge them as security for a company loan. With a merchant cash advance, lenders often request merely a portion of your business's projected sales revenues as security, which preserves the availability of all other corporate assets for those other uses as needed. FlexiLoans provides business loan without collateral.
How to Apply for aMerchant Cash Advance?
Our digital-first approach makes the term loan application process paperless and branchless. Here are the steps you can follow to get a term loan of ₹50 lakh:
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Fill in Your Business and Financial Details
In order to proceed further with the business loan application, you must provide all the essential documents we have listed above.
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Upload the Required Documents Securely
Upload all your documents quickly and safely with soft copies. Our 100% digital process eliminates the need to follow paper trails.
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Get Eligibility Confirmation and a Loan Offer
Once you upload all your documents, we assess them and provide status about approval or rejection. If you qualify, we will release a loan offer.
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Accept the Terms and Receive Funds in Your Account
After accepting the terms, you will receive the loan amount in your bank account to fund your business operations.
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