A Merchant Cash Advance, also referred to as credit card receivable funding, is a funding option available to small businesses. In simple words, Merchant Cash Advance is a lump sum of capital that the small business pays while using a part of their everyday credit card transactions. Depending on the credit card sales of your small business, this alternative funding method is generally efficient, quick, as well as easy to manage.

If you are a business owner who accepts different types of payments or receivables, including credit card payments, then you can take advantage of the Merchant Cash Advance (MCA) funding choice. With this handy funding, you can get an advance of funds that flow through your merchant account on a daily basis.

Nonetheless, MCA shouldn’t be misconstrued as a loan; rather it is just an advance that you take based on the credit card sales or future revenues of your business. By applying for a MCA, you obtain advance money deposited into your business account just as soon your application is accepted.

How Merchant Cash Advance works

The first and foremost benchmark for receiving a MCA is you need to have an expected credit card sales volume. Although you may notice that there are marginally different terms offered by several MCA providers, the primary one is the evidence of your credit card sales volume, which should be steady and predictable.

The maximum amount that you can obtain through MCA is determined by your average monthly gross. In exchange for this, the MCA provider acquires a fixed percentage of the future credit card sales of your business based on the magnitude of your credit card sales. They receive this payment until they obtain the amount of your future credit card sales that they bought.

Eligibility for Merchant Cash Advance

There is an application procedure that you need to complete in order to obtain Merchant Cash Advance. This typically takes around 3 to 14 days. In order to qualify for MCA, there are some eligibility conditions that you need to fulfill. These include:

  •   Your business must be at least 5 months old.
  •   Your credit score should be above 400 points.
  •   Your annual revenue needs to be a minimum of $120,000

However, you must note that these are the common qualifications for obtaining Merchant Cash Advance. Different providers may have slightly different terms, depending on their offerings. You would come to know about the remaining eligibility criteria at the time of your application.

When it comes to finding a MCA provider, most of them work online. You can do a quick online search of financing companies that provide Merchant Cash Advance. Compare these companies and pick the one that offers MCA funding according to your requirements with minimum paperwork and easiest application process.

Benefits of Merchant Cash Advance

MCA has a lot of advantages if you choose the right MCA provider for your small business. The principal benefit is that this method of funding is pretty quick. You can instantly receive money for your small business and make plans for its future growth.

After your application is accepted by the MCA provider, you can get the money you need to accelerate your small company. You can spend this amount on anything that you require to enlarge your business. Albeit, you may feel that MCA is somewhat costly than other funding options, it is the best one for a small business struggling to obtain money from conventional methods or regular providers.

Another benefit is that Merchant Cash Advance is a better alternative to business loans. Some of the other advantages of MCA are as follows:

  1. Easy application and collection procedure

A MCA is a simple, uncomplicated, and effortless process for getting funds for your small business. Starting from the application process till the collection procedure, MCA is so much easy as compared to other loan options.

Where commercial lenders assess a plenty of documents, ranging from financial statements and business plans to tax returns; MCA providers just look at two simple things, which include the duration of your business and your monthly credit card returns. Just keep in mind that your business should be at least 5 months old and you need to have a minimum of $10,000 in your credit card sales per month.

  1. Swift Avenue to receive cash

Small businesses generally require funding instantly owing to their different business needs. This is where MCA steps in to help. It is a quick way of getting cash for your business. While other loan options take weeks or even months to finish the whole procedure, a MCA is typically at your disposal within one week of submitting your MCA application. Less paperwork in MCA results in a fast turnaround and thus is pretty advantageous for the small business, particularly when it needs immediate funding or wants to grab an unanticipated opportunity.

  1. No collateral or credit is put at risk

A MCA is a very safe method to get quick cash funding for your business.  While commercial loans can affect your business credit rating, a MCA works as a sales transaction and hence does not show up on your credit report. In addition, if you opt for a cash advance, you have the risk of losing your collateral, which is a common problem seen in a default commercial loan scenario.

  1. High rate of approval

Unlike other loan options that evaluate the credit standing of a firm, Merchant Cash Advance considers the real performance of the business. This pragmatic method allows any stable business to meet the criteria for a cash advance. Typically, the amount of advance you receive depends on the average monthly revenue that your business attained in the preceding year.

Thus, you know now that Merchant Cash Advance is the best alternative to obtain safe access to cash and that too instantly. Plus, MCA saves you from the stress of losing collateral, in the case of default during inevitable sales lulls. This funding option just collects a fixed percentage of your business returns, tin turn providing the business flexibility to bear the unforeseen transitions in today’s economy.