Merchant Financing vs Cash Advance: Which is Right for You?

Clearent works hard to provide merchants with the best tools to help them run their businesses more efficiently. For most small businesses, the biggest obstacle preventing growth is access to capital. Our popular Merchant Financing products and Cash Advance solutions, known for their quick application processes and flexible terms, are the perfect solution.

However, with multiple financing and cash advance solutions to choose from, many merchants and partners are asking, “What’s the difference between Merchant Financing and Cash Advance?” and “Which one is right for me?” We’re going break down the unique benefits of each to help you get a better sense of which solution is best for your business.

Merchant Financing

American Express® Merchant Financing offers small business loans between $5,000 and $2,000,000 exclusively to eligible businesses that accept American Express® Cards. You benefit from a fixed fee – not an interest rate – and daily automatic repayment. These loans are offered in 6, 12 and 24-month terms and are secured by business assets, excluding real property and motor vehicles.

These loans come with some great benefits, including:

  • Know how much you’re paying. Pay a fixed fee of your loan amount, instead of paying an interest rate. This means you’ll know your total repayment amount up front.
  • Automatic repayment. Repay your loan automatically each day with a percentage of your credit and debit card receivables or from your business bank account. You can also tailor your repayment plan to the seasonality and fluctuations of your business.
  • Rewards for early repayment. If you pay off your loan early you may be eligible for a rebate up to 25% of your fixed fee.
  • Quick and easy approval. Apply online or through your Clearent representative. American Express will review your information to determine your eligibility and loan terms. Once approved, you’ll get your money in a few business days and then automatic repayment begins.

Learn more about Merchant Financing here.

Cash Advance Solutions

When your business is in need of short-term financing, Clearent’s Merchant Cash Advance solutions can quickly replenish your bank account so you have access to the funds you need to grow your business. Thanks to our quick approval turnaround times, you can receive your funds as early as the next business day.

It’s important to note that a cash advance is not a loan. It’s factoring, which means your future sales are purchased today at a discount. This way you can use your future credit card sales to increase your cash flow and pay for the things you need right away. Whether you want to expand your store, purchase new equipment or kick off a new marketing campaign, Merchant Cash Advances through Clearent can help.

  • Flexible payments and terms. Your payments are based on a fixed percentage of your daily sales, which means they move with your business. As your sales go down, so do your payments. When your sales are up, you’re able to repay your funds faster. There’s no need to make large monthly payments, and your payments are generally paid back within 6-12 months.
  • Your credit score isn’t the only determining factor in your approval. Your application is reviewed holistically. Your credit score isn’t the only determining factor. Sales volume and how long you’ve been in business are also taken into consideration. Approval rates are high and don’t require personal collateral, equity or a down payment in order to qualify.
  • Quick and easy approval. You don’t need to spend days and weeks compiling information and paperwork to get approved for a Merchant Cash Advance. Applications are simple to complete and most approval decisions are made within 48 hours. Approved businesses usually receive their funds in 5-7 business days.

Learn more about Cash Advance solutions here.

Our Merchant Financing and Cash Advance solutions have the same benefits of getting you the cash you need to grow your business with an easy application process and flexible terms. Keep in mind that Merchant Cash Advance is not a loan. Instead, it’s a purchase of your future credit card sales. Repayment is tied to your sales volume and, therefore, your daily repayment amount moves with you. Cash Advance programs are also able to take a more holistic look at your application versus a traditional loan. Merchant Financing is a traditional loan. Although, you may be able to tailor your repayment terms to accommodate seasonal fluctuations and daily credit card volume. Ultimately, both can be fine-tuned to help you succeed. Contact us today and we’ll help you decide which option is best for your business.

About Author

Rory Marr

Rory Marr

Product Manager

Rory brings third-party products to Clearent. He has 12+ years of product experience in the payments industry. He lives in South Florida with his wife, daughter, and two German Shepherds, and in his spare time enjoys fishing and the outdoors.

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