Merchant Cash Advance (MCA) is a type of financing that can be used by small businesses to meet a short-term capital requirement. In a nutshell, a MCA provides quick and simple access to cash, leveraged against future sales. While these advances were initially designed to finance future credit card sales, they have now expanded to finance any future sales, no matter how payment is collected. This makes a Merchant Cash Advance a suitable solution for a wide range of businesses.
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How a Merchant Cash Advance Works
A Merchant Cash advance is not technically a loan but is rather considered a business-to-business transaction where a financial sum is exchanged for a portion of future sales. This means that the loan amount is determined by the sales performance of the business, with the lender taking into account bank statements, credit card sales, commercial sales and more. They are typically up to 2 year loans with payments made as a percentage of daily sales, or with no credit card sales, as daily or weekly deductions from the business bank account.
What Sorts of Businesses Use a Merchant Cash Advance
A Merchant Cash Advance is typically used by small to medium sized businesses that need quick access to cash. They tend to be ideal as a short-term solution to cash-flow issues where the business is expected to continue growing. There are a number of advantages to this type of solution which will help explain the types of business that turn to these cash advances as financing solutions. Let’s look at those advantages.
Quick Approval and Funding
Approval for these advances can take as little as 2-24 hours with the cash becoming available within 2-5 working days. This is perfect for time-sensitive cash-flow problems or times when a business may want to quickly buy supplies at sale prices.
Simple Qualification for Loans
Because a Merchant Cash Advance is cash flow driven, it is much easier to get approval for the financing than it is to qualify for a business loan. Even companies with poor personal or business credit can be approved for a loan.
Simple Process
The process of applying for the cash advance is simple and quick, with much of the application processed online or over the phone. There is a minimal number of documents required so the business won’t get bogged down in paperwork when applying.
No Restrictions
There are no restrictions placed on how the business uses the cash from this type of funding. The funding is often used as a bridge until a longer term solution can be found, but it can be used for whatever purpose the business owner requires.
Get the Cash You Need When You Need It
With payment collected through future sales, a Merchant Cash Advance can be just the right injection of cash into your small business to help you grow your company in the short-term. It is a simple and hassle-free solution which is available to almost any business that needs a cash infusion for any reason.
