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A Guide to Merchant Cash Advances

If you are in urgent need of commercial financing to keep your small or medium business on its feet, you should choose from the many flexible alternative types of financing to help address your specific needs.

A merchant cash advance is one such innovative way to acquire funding. The product hasn’t been around for too long— at least not as long as loans and credit lines, but savvy merchants are already making the most of it.

Cash advances are comparatively easy to acquire; they offer hassle-free settlement terms and can help you bridge the gaps left by other forms of funding you use.

Find out everything you must know about MCAs.

Merchant Cash Advances— What are they?

MCAs are for merchants who use a card point of sale to process shopper or consumer payments. They enable a business owner to borrow a lump sum against the transactions being processed through their card terminal per month. You can only borrow money up to an equivalent of your monthly earnings.

The finance provider works with your card terminal vendor to monitor first-hand the amount of card earnings your business rakes in every month. That way, it makes it easier for the lender to secure compared to other forms of lending.

Repayments are remitted directly, and as a pre-agreed proportion of your earnings, so you don’t have to worry about settlement if you go for a merchant cash advance.

Another pro of MCAs is that instead of a fixed settlement structure, repayments are in proportion to your monthly card revenue and fluctuate with it.

Features of a Merchant Cash Advance

In a few words, MCAs have some desirable features which can make handy for business owners:

  • Amount you Accessible by any business accepts cards in terminals for most of their transactions
  • Flexible and scalable; the settlement is in proportion to card earnings
  • Borrowing limit based on turnover
  • Easy to obtain—no credit checks or demanding application procedures
  • Settlements are remitted automatically, so you don’t have to worry about repayments
  • It can be used alongside other types of funding.

Should I Take an MCA for My Business?

MCAs are structured for retailers who take payments through card terminals and those in the leisure industries.

To use it to your advantage and increase your borrowing limit, you need a significant amount of your earnings to originate for card transactions.

Other than these requirements, this alternative source of business financing is pretty easy to get your hands on because you won’t need good credit, bank statements, or collateral to secure it.

Final Remarks

You need a product like an MCA because sometimes the financial needs of a business are unpredictable. Cash advances inject instant money to help you address matters that require immediate cash.