Business Tip 3 - Be Careful Which Merchant Cash Advance Provider You Give Your Information To

Many of you may not be aware of this, but there are two types of merchant cash advance providers vying for your business. It is important that you know the difference between these two types of providers before sending them your information.

Type #1, an agent: An agent is someone who works with a network of several different lenders. They operate by offering your business a cash advance and request your personal information in order to get the process started.

Since they are not the actual lender, they make their money by selling your information for about $50 to maybe 20 different lenders. These 20 or so lenders then begin the process of looking into your credit. Once you have 20 different people making queries into your credit, it can have a very negative effect on your credit score.

We are talking about tens of thousands of dollars; even the slightest hint of something negative can spook lenders into not wanting to part with their money. I have seen this dozens of times.

Type #2, a lender: A lender is the person or a group of people that owns the money that is being used for your cash advance. The money comes directly from their bank account to yours. They are the ones who take the risks and they are also the ones who make the decision as to whether or not you are eligible for the merchant loan.

It is always a good idea to ask directly whether they are a direct lender or an agent. I am not saying that agents are disreputable; I am just saying that their objectives and your objectives may not be in line with one another.

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