Merchant Cash Advance
Merchant cash advances provide fast funding to businesses based on future credit card and debit card sales. The business receives an upfront lump sum and repays it as a percentage of daily card processing over an agreed term, often 6-12 months.
Cash advances are quick and convenient versus traditional loans, though more costly. They can help rapidly growing businesses fund inventory, marketing, payroll, or other needs when cash is tight. Funders analyze card payment history versus credit scores.
Cash advances tap into future sales versus business assets for collateral. Therefore amounts may be limited for newer businesses before showing consistent processing volumes.
To learn more about how a merchant cash advance can help your business today, complete our 15-Second Online Application here to speak with a business financing advisor.
Tips for Utilizing Merchant Cash Advance
Merchant cash advances work for established businesses with steady card revenue streams. Ensure your payment processor provides detailed reporting on processing volume. Start with smaller advance amounts to test the option first.
Use funds for short term working capital like inventory and marketing that will quickly generate sales and card payments. Avoid long term investments better suited for a business loan. Build a reserve for the daily repayment percentage.
Be conservative in the projected daily repayment amount to avoid default. Consider seasonal fluctuations and have a plan to cover repayments if processing dips. Maintain strong processing history.
Benefits of Merchant Cash Advances
The biggest benefits of merchant cash advances are fast approval decisions and funding in days versus weeks or months. Minimal documentation is required compared to traditional loans.
Daily repayment amounts adjust with card processing volume – the more sales, the more repaid. There are often no fixed repayment dates or prepayment penalties.
Cash advances allow new and growing businesses to tap future potential versus just relying on current assets and credit. Quick access to capital can be key for seizing opportunities.
Merchant Cash Advance Requirements
- In business for 3+ months
- Minimum $5,000+ in monthly gross sales
- Active merchant account and credit card processor
- 3-6 months of bank and card processing statements
- Proof of business permits/licenses
- Utility bill evidencing business address
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Are Merchant Cash Advances the same as a loan?
A merchant cash advance isn’t technically a loan with set terms. It is an advance on future sales and is paid back by taking an agreed upon percentage on a daily or weekly basis. The benefits of a merchant cash advance are you can pay back the loan as quickly or as slowly as your business sales allow. Explore your options when it comes to an merchant cash advance by completing our 15-second online application today.
