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Merchant Cash Advance: Fast, Flexible Small Business Funding Option

What does every small business owner in the U.S. have in common right now? Recovery. A need for a smooth recovery and future growth. There are currently 31.7 million small businesses in the U.S., and they have all been affected by these unprecedented times brought on by the pandemic. 

As the economy bounces back and the country transitions out of the pandemic, the need for access to fast capital for recovery and growth will continue to increase. However, many small businesses are not sure where to turn. The federal relief from the Paycheck Protection Program (PPP) ended on May 31 – back to the drawing board.

The Problem with Traditional Funding Options

In the words of Carson Lappetito, president of Sunwest Bank, “You’re a number at a big bank. I would think most clients experienced this when they went through PPP.”

At the end of the day, the best funding option for your business is the one that meets your business’ unique and specific needs. Since that almost always includes a need for fast funds, it quickly rules out traditional lending options. Known for being hard to qualify for and involving extensive documentation and other requirements, traditional lenders do not check the box for flexible or speedy financing. 

Many small business owners have chosen to look elsewhere. As a direct result of this growing need, the number of alternative lenders has increased in recent years. These companies specialize in providing customized solutions that help small businesses secure fast, flexible funding for further growth. A great example of an alternative to a PPP loan is a merchant cash advance.

PPP Loan Alternative: Merchant Cash Advance

What is a merchant cash advance (MCA)? Historically, a merchant cash advance was for businesses whose revenue comes primarily from credit and debit card sales (e.g. restaurants and retail shops). Now, they are available to other business types that do not necessarily rely heavily on such sales.

Typically, the business receives an upfront sum of cash in exchange for a slice of the business’ future credit and debit card sales. That amount is then repaid by remitting fixed daily or weekly debits from the business’ bank account; this is known as ACH (Automated Clearing House) withdrawals. So, instead of making one, fixed monthly payment over a set repayment period, you make daily or weekly payments – plus fees – until the amount is paid in full.

The flexibility of this option has become very attractive during these unprecedented times for a few reasons:

  • MCAs are quick. Depending on the provider, you can secure access to cash in as little as 24 hours.
  • Collateral isn’t needed. Because they are unsecured, you do not have to provide physical collateral. You do not have to offer up business assets upfront for funds, and then risk losing them if you can’t afford to repay.
  • Repayment is flexible. If sales are down, your payment is lower too. Your repayments adjust based on how well your business is doing. Experience a booming month, pay back more. Weather through a slow season, pay back less.

If you’re in need of business funding, consider the many advantages of partnering with our team at Enjoy a fast approval process that allows you to have funds in your account in as little as 24 hours. Get in touch with us today to get started.