What is a Merchant Cash Advance?
Updated: Jan 20
A merchant cash advance (MCA) loan is basically to an investment to your business that you return over time. Let me explain. When applying for an MCA, lenders will look at your credit card and bank statements to see how much you’re qualified for. Using those statements, they will be able to predict a rough estimate of how much money you will make. Hence, “investing” in the future sales of your business.
Once lenders predict approximately how much you will make over time, they will present you with an amount you’re qualified for. Once you are approved you will be given a rate along with terms of the agreement. You will be given a payment amount to pay back the advance in small amounts over time. This is based on multiple factors such as how long it will take you to pay back the amount based on the income of your business.
Is a merchant cash advance right for your business?
Although rates can be higher, MCA’s can be a fairly quick process. You can be approved within 24 hours. Merchant cash advances do not show up on business credit. A Business Owner's Guide To: Merchant Cash Advance states, “This type of financing does not build business credit because merchant cash advance providers do not report to business credit reporting agencies.” Compared to your regular business loan, MCA’s are more flexible with terms of repayment. Payments vary based on your financials so there is leniency there.
Small businesses reported that lack of capital was their biggest issue. They were not able to get approved when they needed it the most. They didn’t know there were other options. They were not given the opportunities available to them. If your business is in need of some quick capital, I would highly suggest applying for a merchant cash advance.
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