Merchant Cash Advance: Understanding the Process

Businesses often tie up their assets in operational expenses. When expansion feels nearby or bills are looming, business owners may need to seek out alternative forms of funding. Chief amongst these is a merchant cash advance (MCA). 

MCAs allows businesses to receive an advance on their future profits and invest or pay off bills in the present. Keep reading to learn more about a merchant cash advance and if they are the best way to finance your business. 

What Is a Merchant Cash Advance? 

A merchant cash advance provides small businesses with a financial alternative to traditional loans. These advances give business owners the opportunity to receive funds and slowly pay back the borrowed sum through future revenue. Allowing payment to come from sales, can be a major reprieve for struggling businesses. 

How To Get a Merchant Cash Advance 

MCAs are a cash advance based on the volume of your credit card receipts. The funder will be reimbursed for the cash advance by taking a percentage of credit card sales each day. 

Determine Your Repayment Structure 

Once you get connected with a Merchant Cash Advance company, you will need to opt into a repayment structure. The most common of these is the percentage of credit card sales. In this method, the advance funder will take a percent of your business’ credit and debit card sales. 

Alternatively, businesses may choose a fixed withdrawal system for repayment. In this agreement, businesses will pay a daily or weekly sum based on the monthly revenue. 

Calculate the Cost of Advance 

There are fees associated with cash advances, so before you take out an advance you should determine how long it will take you to pay it in full. This foresight will help you make sure that MCAs are right for you. 

Benefits of Merchant Cash Advances

Merchant advance loans give borrowers access to quick cash to advance their business and pay off impending debts. Merchant cash advances give businesses the opportunity to expand their company or pay off debt. MCAs offer fast access to capital and flexibility in terms of repayment.

This is a feasible option for many business owners because the credit requirements are minimal and business owners are not restricted as to how they can use the capital. Whereas many traditional loans are prescriptive and require business owners to put down collateral. 

Disadvantages of Merchant Cash Advances

MCAs are not for everyone, as they can be very expensive and the daily minimums may hurt a business’ cash flow. Unlike other forms of capital, MCAs also don’t strengthen a business’ credit rating. 

Grow Your Business With a Merchant Cash Advance 

Merchant cash advance companies front the capital for businesses seeking a cash advance. As your #1 source for funding in merchant capital, Clarendon Funding’s team of financial experts are ready to help you receive your cash advance. Connect with us to grow your business with a merchant cash advance today.