Cash is king for any business, especially for small and mid-sized businesses. Therefore, cash flow is essential for the businesses to meet the day-to-day expenditure which includes employee salaries, payment to suppliers, maintain a stock of goods, expansions of the business, or to purchase new equipment. Small business is slowly turning away from the traditional bank loans due to their time-consuming, lengthy procedures and is approaching non-bank lenders for quick funds. Businesses with high-risk and low credit rating are denied loans by many lenders, and this is where merchant cash advance funding comes into the picture as a new solution for small businesses. Merchant cash advance lenders advance lump sum cash to the businesses that use credit or debit card machines to accept payments and are therefore free from credit checks and collaterals.

If you are wondering what merchant cash advance funding is and how it works for small businesses then here are the details. A merchant cash advance is an alternative financing source for small and medium sized businesses. The cash advance makes the best option for entrepreneurs with a bad or low credit rating that is turned down by commercial banks.

It should be noted that this kind of funding is different from a commercial bank loan as it is a purchase of a percentage of future sales of the business at a discounted price. A purchase sale agreement is entered by the lender and the borrower. The future sales of the business are purchased by the lender at a discounted price at is repaid by the borrower as a portion of sales on a daily basis. The merchant cash account provider collects the portion of sales on behalf of the lender and later transfers it to the lender’s account.

There are many reasons why merchant cash advance funding is an excellent alternative;

Bad credit approvals

The best part of merchant cash advance loan is that having a bad credit does not affect the approval of the loan, unlike traditional bank loans. Bad credit or low credit rating of the borrower is not given importance, but the sales history and the projected sales of the business are focused when approving the loan.

Approval rates

Small business loan applications are denied by traditional and commercial banks for various reasons such as bad credit, lack of repaying capacity or for not providing supporting documents for the loan application. On the other hand, merchant cash advance approvals are high as the application is simple, requires fewer documentations and are not based on credit rating.

Collateral free

Merchant cash advance funding is a sales transaction and not a loan. Due to this, the advance does not require any collateral, unlike traditional bank business loans which require collaterals to back up the loan amount.

Simple process

The entire process of availing merchant cash advance is simple and requires minimal efforts. The borrowers can apply for the advance online and can get approval within a week’s time.


The repayment of the merchant cash advance is easy as the portion of the sales agreed to be repaid on a daily basis is collected by the merchant cash provider on behalf of the lender and the borrower is free from making a note of payment or missing the payment.

Fast funding, easy approval, and effortless repayment are main features of merchant cash advance funding which makes this alternative financing option more attractive to the small businesses when compared to the other finance options.