Loans and Today’s Modern Merchants

In the medieval times, merchants are known for their wealth and fame. They travel in other countries for business and commerce, trading goods and services with fellow merchants. They seem to have a limitless source of money. Medieval literatures stereotype them as wearing gold jewelries, carrying bulky bags of gold, and travelling in galleons. Contemporary culture has eliminated the stereotype for merchants. Now, any businessman can be considered a merchant. They do not wear expensive jewelries and wardrobes; their attire depends on their field of business. Most importantly, they do not have an infinite source of capital. They experience financial setbacks and bankruptcy risks. There are three types of businessmen. These are small-scale, medium-scale, and large-scale businessmen. They are the merchants of the modern business landscape. Merchant not only refers to people; it also refers to a kind of credit scheme. In times of financial need, businesspeople obtain merchant loans. Merchant loans are also known as business cash advances. Businessmen get a cash advance from lending companies, which charge a fixed interest rate and set payment provisions for lending. Payment provisions include periodic payment. Borrowers pay merchant loans through future sales. They give payments monthly, quarterly, or annually. They set aside a certain percentage from their total sales. The amount of periodic payment depends on the total sales of a business. Businessmen pay a bigger periodic payment for high revenues. In the same way, they only pay a measly amount when their sales are low. Merchant loans do not have a predetermined payment date. Businessmen pay periodically until they cover the total loan amount. Hence, most debtors prefer merchant loans over other types of loans. They are spared from the pressure of paying a big amount of money all the time. Moreover, merchant loans do not require collateral. Collateral refers to secured property payment. Common collaterals are real estate, car, commercial ownership, and insurance accounts. Creditors get the collateral when a borrower fails to pay loan. Merchant loan lenders do not ask for collateral, albeit they impose higher interest rates for loan accounts. Businessmen highly regard merchant loans for financial emergency needs. They are a fast, convenient, and easy way of getting cash. Merchant loans help businessmen sustain business operations. After all, businessmen do not have capital; they also run out of cash once in a while.