If you have been keeping up with the latest news regarding business loans in the first quarter of 2016, you are aware that a lot is happening. Loan approval rates are on the rise and major banks are loosening up restrictions. Of all the loans available to companies in the United States, a recent report shows that most businesses are turning to “cash advances”, also known as “merchant cash advances”.
A study conducted by the Federal Reserve Bank suggests that entrepreneurs want loans that act as lines of credit, which is why most are choosing cash advances. The Fast and Easy Funds cash advance works like a line of credit and can be renewed as many times as needed, as long as 50 percent of the original loan has been paid off. The Federal Reserve Bank further reports that 57 percent of entrepreneurs are choosing cash advances over any other loan.
Everyone knows that loans are always paired with penalties and interest rates, but cash advances work a little differently. Cash advances are awarded and calculated using an estimate of future sales and the businesses repays the loan out of a percent of the sales made on a weekly or biweekly basis. The business enjoys the benefits of using the loan as a line of credit, and monies can be acquired easily by drawing directly from the fund. Although seasonal businesses are often the most apt to choose a cash advance over any other loan, many other businesses are choosing this form of credit over other loans.