Small businesses are turning to non-bank lenders when they are in need of some quick funds to meet the unexpected expenditures. Merchant cash advance funding is a lump sum cash advanced to the business for the sale of the future sales of the business at a discounted price. The cash advance amount and approval is based on the credit card sales turnover of the business by the merchant cash advance provider. Any business with merchant cash account which is in business for few years and meets the sales turnover specified by the lender is eligible to apply for the loan. Merchant cash advance providers often partner with the card processing companies to hold the percentage of daily sales towards repayment of the cash advanced to the business. The holding process will continue until the cash advanced is received in full. Merchant cash advance funding is flexible and can be customized to the funding requirements of the small businesses.

How MCA differ from business loans?

Merchant cash advance differs greatly from business loans. Business loans involve collaterals, fixed repayments on a monthly basis and are often approved based on the credit score of the business owner. These loans cannot be availed by a small business that does not have assets on hand to pledge with the lender. A business owner with bad credit is not eligible for applying for a business loan. Fortunately, merchant cash advances consider different parameters for approval and disbursal of funds as these cash advances are not loans but advance against the future sales of the company. A small business sells the future income in exchange for immediate cash to raise working capital. The lender in turn automatically deducts the set percentage of sales of the credit card sales of the business to cover the cash advance, and the deduction continues until the full cash advance is recovered.

Features of the Merchant Cash Advance Funding

  1.    A merchant cash advance proves beneficial to small businesses by providing some quick funds when there is an emergency.
  2.    The cash advance is based on the credit card sales of the business and not credit score or collateral which enables most of the small businesses in availing these cash advances.
  3.    The cash advance is recovered as a percentage of daily sales and hence is free from fixed monthly payments.
  4.    Any business with strong credit card sales with a specified amount of sales is eligible to apply for merchant cash advance.
  5.    A  merchant cash advance is free from hidden fees or charges, unlike other business loans. Merchant lenders offer cash advances at a factor rate, and this rate differs with each lender.
  6.    The business is not obligated fixed repayment amount when the sales are low as the amount of the repayment is based on the amount of credit card sales.

However, small businesses that have a bankruptcy filed recently or is a start-up business does not qualify for the merchant cash advance funding. Apply for a  merchant cash advance today and get required funds quickly to meet your business expenditure easily.