Advantages of Merchant Cash Advance

The Merchant Cash Advance funding alternative has been around for almost a decade.  It has given small businesses a lifeline when the cash flow is less than favorable.  For some it provides the needed freedom to put plans into action and fund necessary changes to improve their product, service or place of business.   

For small business owners who are new to the Merchant Cash Advance option, here is a closer look at what the service is all about.

·         Merchant Cash Advance providers require very little documentation and verification. Compared to bank loans that require tons of paperwork, all the merchant cash advance provider would require from you is your basic business information and credit/debit card history.  The financing company will use this information to determine the allowable loan amount and payment terms.

·         Your credit score is not a consideration for approval.  The chance for approval is usually at 95% because credit scores are not taken into consideration. Your approval will be based on your actual earnings and the perceived future earnings along with a few requirements that you may already have.

·         Very minimal qualification requirement. Yes, there are requirements but most small businesses have the requirements already.  The following requirements are a must Merchant Cash Advance applicants: A credit card/EFTPOS (electronic fund transfer at point of sale). Depending on the MCA provider there is a minimum debit/credit card sale per month.  The minimum requirement is usually between monthly sales of around $7000 to $10,000.

·         No collaterals needed.  There is no need to tie your assets with a loan and placed in jeopardy especially if the sum you need is not substantial. 

·         There are no interest rates and no monthly due dates.  The most stressful thing about small business loans from banks are the monthly payment and due dates that small business owners need to adhere to.  Not being able to keep up with the payment due dates means more cost for the business because of the accrued surcharges and penalties.  This is particularly stressful for seasonal businesses such gift shops, tourist shops and specialty stores, services and establishments.   With Merchant Cash Advance, this stress is avoided because the payment scheme is based on how much the business is making.

·         Payment is made daily but is in proportion to your actual sales.  Payment is set at a certain percentage of the daily sales usually at 10% to 20%. So even if it’s a slow month, you need not fear a default on the loan. Payment is automatically transferred to the MCA provider’s account by the credit/debit card processing company.  No need to rush anywhere to make payments. 

The Merchant Cash Advance financing model has recently risen in popularity and there is good reason that for it.  If you feel that your business needs financial assistance for whatever reason without the stress, this service may just be the right one for you.