Merchant cash advances are a way for small businesses to get cash quickly for growth or to maintain cash flow. Anyone who gets a loan wants a low interest rate, but how do you get one? These tips may help you get a better factor rate on your merchant loan, so you pay less in interest and keep your business on track.
Shop Around
Merchant cash advances (MCAs) are competitive and companies offer varying factor rates to attract clients. There are two different types of merchant loans: traditional and nontraditional. Traditional MCAs deposit money into the bank account and subtract what is owed using ACH processing, but the sales are delayed a day. Some companies can directly pull a percentage of sales as the card processes, but it may require a third-party company.
Non-traditional MCA groups can process payments on their own. Companies like PayPal are considered non-traditional MCA loaners, and they can deduct a percentage of credit card sales without a third-party. However, this usually requires the use of their technology.
Ask the Company for a Lower Rate
It can be difficult to get a lower factor rate from a company, but you can always ask what you can do to lower the interest applied to your account. Before you accept an MCA, collect factor rates of different companies. Due to the competitive nature of the business, you may be able to talk one company into matching the factor rate of another merchant loan. Additionally, there may be certain steps you can take to lower your factor rate. It may take a lot of work, but you’ll end up paying a lot less in interest in the long run.
Don’t Bother With Unwilling Providers
The last thing you want to do is accept a company that doesn’t seem to care about you as a client. If the provider is unwilling to work with you on the factor rate, they’re much less likely to work with you on other serious matters. Ask plenty of questions on how you can lower your factor rate and judge how well the customer specialist responds. If you aren’t happy with the quality of service, don’t bother trying to negotiate for long. It may be possible to ask another company if they can match what you like most about the unwilling provider.
