Merchant Cash Advance proposes to lend money to merchants based on their credit card receivables.  However these lending options are very expensive.   Is peer-to-peer (P2P) lending an alternative to merchant cash advance? 

Companies, such as Lending Club, Prosper, and Loanio, are connecting people who need money with those who wish to lend it.  Utilizing P2P lending, borrowers can access the money at a lower interest rate than they would if they used even more traditional bank lines or a credit card.  At the same time, individuals who have money to invest get better returns than either the stock market or any bank savings are delivering today.

P2P lending may be worth researching for merchants considering a merchant cash advance program.

For 6 million small businesses operating in a struggling economy, these are anxious times.  We’ve witnessed the credit markets freeze, massive bailouts and the most far reaching reordering of our financial system since the Great Depression.  During these tough economic times, more and more businesses are being introduced to alternative financing solutions:

Merchant Cash Advance
With tightening credit markets, merchant cash advance has moved from lender of last resort to lender of only resort for many.  But understand that these funds are very expensive.  Even at reputable companies promoting the lowest rates in the industry, the annual percentage rate of interest can calculate to over 40%.   So it’s important to ask yourself: Is the investment I’m going to make with the advance funds I receive going to generate at least a 40% return on that investment?  If you are thinking of using the money to make payroll or pay other debts, you will have a hard time getting approved.   Recognize that merchant cash advance is a cash flow loan usually paid back over a short time period of 6 months to a year.  Make sure you calculate a 20% or more reduction in your cash flow from credit card receivables during the payback period to determine if you can survive. 

Trade Credit Express
For B2B merchants, Trade Credit Express is a service that can provide non-recourse advanced funds on your outstanding accounts receivables at highly competitive rates equivalent to accepting a credit card for payment.  The benefit is that you are paid in days while your customer continues to enjoy your free and flexible trade credit terms.  In fact, with this product, you can further extend trade credit on longer terms; say 60 or 90 days, to win new business from customers feeling the pinch of today’s tight credit markets.  Credit decision, credit monitoring and payment guarantees are just a few of the benefits of Trade Credit Express.  

Contact Vantage Card Services to learn more about these alternative finance solutions or for a demo or quote.