Merchant cash advance has made headlines in the recent past and many people who are thinking about alternative lending usually consider it as their first option. Many small scale businesses or risky enterprises who don’t qualify, or are not in favor of traditional lenders tend to prefer merchant cash advance providers.Here you’ll get to know a little more about MCA’s, you’ll dig a bit deeper and maybe get the big picture as a potential future client of MCA providers.

What is a merchant cash advance?

In basic terms, a merchant cash advance refers to a lump sum that a client is given by a MCA company. This amount which is loaned to them is repaid based on a fixed percentage of the daily credit card transactions of their clients.

Requirements for you to qualify for a MCA

Compared to the traditional lenders, you will find the MCA providers have simple application procedures besides asking for little requirements. It will be advantageous if you are an established business, and the MCA Company will need you to provide your financial statements, daily credit card sales history, as well as your projected credit transactions in the future. MCA providers don’t ask you to provide any form of collateral for you to meet the cut for getting a merchant cash advance.

Advantages of taking a merchant cash advance

Small scale business owners who opt for a MCA will enjoy some benefits that we will look at briefly. This is in comparison to those who rely on traditional lenders such as banks. Some of the plausible benefits are:

  •   Their application process is simple and less involving; those who opt for a merchant cash advance rarely need to go through the lengthy and distressing application procedures of applying for a bank loan. You simply need to provide a few of your financial documents and statements to be considered by a MCA provider.
  •   They are quite prompt in their response; it would take you weeks to months to get your bank loan to be approved. This can’t be compared to a day or two that will be required for you to get your merchant cash advance loan.
  •   MCA providers have higher approval rates; as long you meet the requirements of most of the MCA companies, you will get the approval of your merchant cash advance loan application.
  •   You can get a loan with a bad debt and no collateral is required; MCA providers take the risk of providing you with a loan even when you have a history of bad debts as long as you meet all their requirements. What is more is that you can qualify for a loan without providing any form of collateral.

Disadvantages of a merchant cash advance

It is an expensive option; a merchant cash advance is considered to be the most expensive of the lending options.

Higher amounts will be deducted from your daily credit sales on high sales volume days; since a fixed percentage of your daily credit has to be remitted to the MCA provider, you won’t fully enjoy your good days in business.