Merchants are always in need of funds to help them run their businesses. Thanks to First American Merchant who has been offering a helping hand to small and medium-sized businesses. We assist retailers with funding through merchant cash advances (MCA). Here is a quick guide to our MCA offers.
What’s a MCA?
A Merchant Cash Advance may also be referred to as the procurement of future sales. A financial firm purchases a given amount in future sales to allow the business owner some money for upfront expenses. The retailer then repays the amount (plus the prearranged fee) additively as he/she continues making sales.
Is a MCA a loan?
Merchants dread the hassle that comes with dealing with banks. Traditional lenders are known for stringent credit requirements, complex contracts, and long, tedious waits. Also, they don’t give out loans to high-risk business, which most small to medium-sized businesses are.
On the other hand, you can have your MCA ready in not more than 72 hours, and access the cash almost immediately. On top that, we won’t ask for financials or tax returns. Only, you’ll have to prove your business is operational and makes money. In a nutshell, cash advances are trouble-free and flexible programs you can most likely access. Although setbacks like unpaid rents or evident bankruptcies might still disqualify your application. In most cases, approval is determined by the total deposits into your business bank account.
The primary difference between a loan and Merchant Cash Advances is that loans come with interest. The sooner you pay your loan, the less you pay in interest. With Merchant cash advances, we’ll agree upon a fee, say up to 30% of the total cash advanced. You pay as you make sales, so the more you make, the faster you pay, but you pay back the same amount of money regardless of your speed.
How to Repay your MCA
You can pay back your Merchant Cash Advance in two ways:
- Split Withholding – refers to where the card processing company automatically divides the credit card sales between the finance firm and business as per the agreed upon portion (say 10% to 22%). It is the most accepted method of collecting funds for both clients and financial firms as it is effortless and straightforward.
- ACH Withholding refers to where the finance company receives credit card processing data and deducts its amount from the business’s checking account using Automated Clearing House (ACH).