Difference Between US & Canadian Business Cash Advance

The concept of a Canadian business cash advance is not that far from the USA’s fast cash advance offerings. Essentially, a merchant cash advance has been traditionally structured as either a fixed lump-sum payment or as a percentage share of future credit card sales in return for an agreed-upon percentage of pre-determined credit card and debit card sales. This arrangement has made Canada’s merchants happy because their cash advance programs are both profitable and easy to understand. But despite the simplicity of these cash advance programs, Canada’s cash advance products have some significant differences from those of the United States. Here are some points to consider when comparing Canada’s cash advances to the United States.

business cash advance

First, you need to understand that Canadian cash advances are designed with the merchant in mind. They are generally made available without the need for a business’s credit score, and they do not require application fees or minimum balances. In other words, if you need a little extra money right now, you can apply for a quick cash loan from your local merchant. There is no need to wait for approval, and you will get your money much faster than you would in the US.

While all merchant cash advances are not created equally, Canadians generally come away with better terms and conditions when compared to the United States. For example, in Canada, you do not need to prove income or savings levels to qualify for a cash advance. Your only pre-requisite for approval is that you have a job and an open checking account with a linked debit and credit card. Even if you are required to provide proof of employment, most lenders will still issue you a cash advance.

business cash advanceWhat about late fees? While it may be true that Canadians are considered to be more responsible borrowers, this does not mean they will be treated any differently when it comes to paying for their cash advances. When you apply for a cash advance using your credit card, the Canadian lender will charge an interest rate equal to 18% of the amount of your cash advance plus an additional fee. This interest rate on the cash advance is calculated based on your credit limit, so keep this in mind when you are applying. Paying the entire balance of the cash advance plus the applicable interest will help you avoid paying penalty fees.

When you pay off your cash advance, you will likely notice a dramatic reduction in the amount of interest you are paying. If you are paying off a balance of ten thousand dollars, you could save up to forty percent in interest by choosing a balance transfer option from your current bank. If you are paying off a balance of thirty thousand dollars, you could also benefit by choosing a cash advance with a longer repayment term. The longer repayment period will reduce your overall cost. Most cash advance providers have reasonable conditions regarding the amount of time you must repay your cash advance.

In the US, borrowers must pay closing costs before receiving the cash advance. If you choose a cash advance with a shorter repayment term, the closing cost will be substantially lower than if you pay the entire loan back on time. One advantage of a cash advance is that you can pay it off quickly, even in the midst of a recession. Keep in mind, though, that the longer you take out a cash advance, the more likely you will face higher interest costs when you are ready to pay it off. The best way to avoid financial difficulties due to cash advances is to keep your credit limits intact and pay the cash advance promptly.