Merchant Cash Advance

A Business/merchant cash advance is an upfront sum of cash in exchange for a portion of your future sales. A merchant cash advance has historically been for businesses whose revenue comes primarily from credit and debit card sales, such as restaurants or retail shops. Business/merchant cash advances are available to other businesses that don’t rely heavily on credit card or debit card sales.

The Details

It is ideal if you need quick cash to handle pressing issues. You can get an upfront sum of cash in exchange for a slice of your future credit and debit card sales, or you can get upfront cash that is repaid by remitting fixed daily or weekly debits from your bank account, known as ACH, for Automated Clearing House, withdrawals.

The predetermined percentage of sales is an estimate based on your projected monthly revenue. Since your sales can fluctuate, the speed with which the loan is repaid could be longer or shorter than expected. Most of the time, it takes longer than the purchaser thought it would take.

The repayment period typically ranges from three to 12 months; the higher your credit card sales, the faster you’ll repay the merchant cash advance.

Your annual percentage rate represents the total borrowing cost of your merchant cash advance, including all fees and interest. This figure also depends on how long it takes you to repay the advance in full.

A merchant cash advance has historically been for businesses whose revenue comes primarily from credit and debit card sales, such as restaurants or retail shops. Business/merchant cash advances are available to other businesses that don’t rely heavily on credit card or debit card sales.

The Good

You can often get an MCA within a week or so with no heavy paperwork. Providers look at a business’s daily credit card receipts to determine if the owner can repay.

The Bad

Since you have to repay a fixed amount of fees no matter what, you get no interest savings from early repayment.

Final Recommendation

Business/merchant cash advance give business owners a viable option. If lack of collateral or a need for speed makes getting a traditional loan difficult, MCAs remain an ideal way to go.

How can we help you?

Contact us today to discuss your options.

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