A merchant cash advance (MCA) is a type of business financing that provides a business with a lump sum of money in exchange for a percentage of the future credit card and debit card sales. This means that instead of paying monthly installments, the merchant does not owe any payments until they generate the sales. MCA’s are used by small to medium sized businesses that don’t want or are unable to get a traditional bank loan. They are meant to help businesses that have problems with cash flow and need to secure cash quickly.
Benefits of a Merchant Cash Advance
There are many advantages of a merchant cash advances. MCA’s are a quick and easy alternative to traditional bank loans. They allow businesses to secure the cash flow they need without going through the banks time consuming approval process.
Merchant cash advances are also helpful for business owners with lower credit scores. Since eligibility is determined by sales projections, credit scores are not as important in qualifying.
Businesses do not have to provide collateral for an MCA. Merchant cash advances are unsecured and no tangible asset is pledged against the necessary funding, the funder is assuming the MCA’s risk.
Because repayment is based upon a percentage of the daily or weekly balance in the merchant account, the more transactions a business does, the faster it's able to repay the advance. This is also beneficial for managing cash flow when going through a slower season, the collections made on the cash advance decrease although the percentage is always the same.
What Businesses Should Use an MCA?
Merchant cash advances are typically for businesses that are experiencing cash flow problems or need access to capital immediately. The process to get approved and receive the funds can happen in the matter of hours or a couple of days. MCA’s are also an option for newer businesses that can’t qualify for a bank loan yet or small businesses that don't have enough assets to provide a bank as collateral.
The Application Process
The entire process, from applying to receiving the funds can happen in the matter of hours or a couple of days. The application is less invasive than applying for a traditional bank loan and can easily be completed online.
1. Complete Online Application Form
2. Provide Documentation
3. Get Approved
4. Set Up Credit Card Processing
5. Finalize Details
6. Receive the Funds
