The merchant cash advance industry is growing. The number of business owners choosing this type of funding solution over other financing options is on the rise. In fact, an MCA isn’t a loan: it’s a purchase of your future sales. If you want to learn more about MCAs and discover the right MCA provider in the U.S., stay on the page.
Merchant Cash Advance (MCA): What It Is and How It Works
Thanks to an MCA, you receive financing based on your future credit card receipts. The MCA provider takes a portion of your future credit card sales on a daily basis, thus getting paid back. The approval is simple and easy, and you can usually get approved for an MCA in a day or two. You won’t be required to provide a lot of paperwork.
To figure out whether an MCA can be the right option for your business, you need to look at its specifics. Particularly, an MCA is ideal for those businesses that have high credit card sales volume. Besides, it’s a go-for option for those who have no time to wait for a traditional funding solution, including short-term loans or long-term loans, or can’t be eligible for other financing options.
What’s more, an MCA doesn’t usually require good business credit or collateral, which can’t be said about traditional business loans. MCA providers are more interested in your business’s cash flow instead of your business history or credit score.
While getting an MCA isn’t a rigorous process, you should look for a reputable provider since there are many MCA lenders in the industry today. Consider applying to FirstAmericanMerchant.com, an award-winning business funding provider in the high-risk field. FAM is rated A+ by the BBB and offers the cheapest possible rates and fees for a merchant cash advance.
Advantages and Disadvantages of Merchant Cash Advances
To better understand whether you should apply for an MCA or not, let’s go through the pros and cons of this type of financing solution.
Pros
- Quick and hassle-free access to cash
- Flexible terms for paying back the amount
- Those with poor credit can be approved
- You’re free to choose how to use your funds
- The provider won’t require collateral
Cons
- Rather costly (70% – 200% APR)
- Minimum daily payment can hurt your cash flow
- You can’t build business credit
- A short-term solution to your financial problem
- Must accept credit cards
Overall, an MCA is ideal for those small businesses that lack extra capital to make their business more competitive and functional. After all, not all business owners qualify for a traditional bank loan.
Merchant Cash Advances. Are They Right for Your Business?
A merchant cash advance differs from a traditional bank loan. Providers will look at your credit card receipts and assess the amount you need and could pay them back. Make sure to work with a reputable MCA provider in the industry.