What is a Merchant Cash Advance (MCA)?

Are you a small business owner who needs to raise capital? The fastest route to fulfill that need is to get help from a Merchant Cash Advance. Basically, it is an advance upon your credit card sales deposited into a business owner’s bank account. In simpler terms, a borrower gets access to money in exchange for daily credit or debit card sales. In addition to this, your potential financing company will deduct a fee from your sales as` well. If you have a poor credit score, you can be eligible for an advance. Even if you don’t collateral to provide, you can get a Merchant Cash Advance.

Peaks and Valleys of MCA

Many business owners find Merchant Cash Advance as a tempting funding option due to its following features:

Fast Funding

Quick access to funds is synonyms with Merchant Cash Advance. Need funds to pay off vendors but emptied the saving box to purchase new equipment? MCA offers funds in 24 hours. Want to hire more people to handle the customer flow in the coming season? Through Merchant Cash Advance, you can get the approval in a couple of hours, and funds would be at your doorstep in one to two business days. Where else can you get funds at this speed?

Poor Credit, no issue!

Other funding options, apart from a Merchant Cash Advance, has a clause that says poor and bad credit score is not accepted. They demand a fair personal and business credit score. In this case, the financing company is taking money from your daily credit sales, so they are more concerned with your consistent credit card sales rather than a credit score. In addition to this, a Merchant Cash Advance funding company is more interested in the time you have been running a business rather than your outstanding debt. So, make sure you are sharing vital financial information with your lender. As MCA has nothing to do with a credit score, they won’t help you to improve the current credit score.

No collateral, no issue!

If you apply for a secured business loan, then you have to offer collateral. When a borrower offers collateral to a lender, a lender feels secure. But if you consider putting valuables as unsafe, apply for a Merchant Cash Advance. For the MCA, a borrower doesn’t have to live with the fear of being homeless if he or she fails to make the repayment on time.

With these several features, the MCA is favored as a funding option, but it comes with a drawback:

Everyday payments

Daily payments are financially straining, as it is mentioned above, a borrower does not have to offer collateral for a Merchant Cash Advance. The lending company never puts itself at risk. With daily payment, they will be taking money from your credit card sales, leaving you with no control and choices. If you are facing an off-season, you won’t be left with adequate annual revenue. Due to these factors, Merchant Cash Advance is considered as one of the most expensive funding options.

How can you qualify?

The qualification criteria for a cash advance are relaxed. The lenders consider three factors: annual revenue, credit score, and time in business.

  • Have a business that is generating an annual revenue of $180,000? You are eligible for a Merchant Cash Advance.
  • Have a business credit score of 500 and above? You can easily qualify for the MCA.
  • Have you been running a business for more than two years? Yes, you are an ideal candidate for a Merchant Cash Advance.

With these qualifications, you can get an advance of $2,000 to $500,000, with a 1.15 to 1.20 factor fee, in just 24 hours. Other than a decent annual revenue, credit score and two years in business, you need the following documents to apply for a loan:

  • Bank Statements
  • Financial Statements
  • Business and Personal Tax Returns
  • Driving License
  • Strategic Business Plan
  • Business Debt Schedule
  • Fill an online application and apply away!

Uses of Merchant Cash Advance

Small business owners can use a Merchant Cash Advance to cover the financial gap in multiple ways:

  1. You can’t wait for the customers to pay off invoices anymore because you need to give a paycheck to an important vendor or have to give salaries to your employees. MCA can provide fast access to funds. It is alright to apply for external funding because often times it gets difficult to afford everyday expenses with interrupting the working capital.
  2. You need a loan or an advance to cover the cost of equipment repairing. Cash Advance can help you with it. Due to its fast access to funds, it is a better option than a traditional loan.
  3. Last Christmas, your seasonal business didn’t make enough profit to cover the inventory cost of the next season. Get instant funding from Merchant Cash Advance and come back with more stock than last year.
  4. Increase manpower, hire more employees and offer better services to your customers. With more brains on board, you can easily manage the workload and even find solutions to the problems.
  5. If you think your business has left a mark in the market, and now you are ready to take the next step – open another franchise – Merchant Cash Advance can help you cover the mandatory operational cost.

Use the loan in whichever way you see fit, prioritizing your business needs.

Is there any alternative option?

If the terms and qualification criteria of Merchant Cash Advance don’t settle well with you, you can explore other options as well. Most business owners apply for a short-term loan to cover temporary expenses. Managers with a fair credit score and strong financial position apply for Business Lines of Credit for streamline cash flow. Understand your financial needs, explore every funding option, and apply for the one is affordable and helps you cover the financial gap.

Lastly, if you think a Merchant Cash Advance is the answer to your financial problems, head over to our website and apply right away. For more updates about Merchant Cash Advance, other small business loans, and tips & tricks follow us on our Twitter (@Onlinecheck) and Facebook (@Onlinecheck). In case of any question feel free to call us on our toll-free number at (833) 827-4412, our loyal and keen financial advisor will answer your every question and guide you throughout the way.

Small Business Financing News │ Merchant Advisors | blog
Merchant Cash Advance 101
Merchant Cash Advance 101
Looking for funding to fund your small business? The road ahead is full of twists and turns because it does require a lot of time and research to locate the best funding program that suits your business. Due to theRead more
You might have heard about a merchant cash advance. but you probably don not fully understand how it works. Here; is 101 about a merchant cash advance.
Merchant Advisors
Merchant Advisors