Merchant cash advance companies

Merchant cash advance companies are very useful
Merchant cash advance companies are very useful

Merchant cash advances are very useful for small business when they are in need of funds to cover their cash flow shortfalls. They are often used for inventory purchases, payment of salaries, marketing or repair expenses. Most merchant cash advance companies have certain request processes that are usually simple and fast compared to applying for regular small business loans.

Only basic information and documentation are required. This may include recent bank and credit card statements, a copy of the business lease, business tax ID, the business owner’s personal social security number and some references. Also usually required are a copy of the business owner’s driving license or some other type of personal ID with a photo and a copy of the business tax returns.

Merchant cash advance companies also provide their products to businesses with a lower credit score that wouldn’t qualify for a loan from a traditional lender such as banks and credit unions. Nevertheless, credit score is still a factor and it is being evaluated by cash advance providers based on their own specific criteria.


Fast application process
Fast application process

Usually, request process in the cash advance industry is fast and money transaction is a matter of days once the approval is concluded.

All this applies for most merchant cash advance providing companies, but they also differ from one another based on contract terms, holdback and interest rate percentages, additional fees and application criteria. They have different levels of customer support quality which is also a defining factor when choosing the most appropriate company to work with.

Therefore, it is important for business owners to do their own research before applying for a cash advance. They should not forget that this product may be very costly, with APR often exceeding 130%. Once they have decided that no other options are suitable for them, they should concentrate on finding the company that provides the easiest application process, combined with lower rates and fees and offering the highest manageable cash amount.

For example, it is not uncommon that a company provides up to $100,000 or even up to $500,000 and business owners need only several minutes to apply.

Good customer service

Good customer service
Good customer service

Good customer service shouldn’t be dismissed also. Trained and experienced consultants are hired by many merchant cash advance providing companies and are always ready to offer qualified help to advise their clients.

Another important factor when choosing a cash advance provider to work with is whether they will let the business owner keep his credit card processor. Very often, advance providers work with certain credit card processors because they use their software to follow the implementation of the contract with the client.

Changing credit card processor may cause some working disruption for the business. Some providers don’t require this while others may be already working with the same credit card processor as their clients.
Here are some typical qualification criteria that are required by some of the biggest industry players in the merchant cash advance market.

They all require at least 500 or 550 credit score and being in the business for at least 3 to 4 months prior to the application. As for monthly credit card sales, the requirement varies from $2,500 to $4,500 monthly sales. Processing volume is an important factor for eligibility.

The average factor rate for their advances may vary from 1.13 to 1.48. As for the percentage that is deducted daily from the credit card sales of the funded business, it may vary from 5% to 50% depending on the cash advance provider.

Annual percentage rate

Annual Percentage Rate
Annual Percentage Rate

APRs are also quite different. There are APRs that are only 29%, but some providers require 80% or even more than 130% of the loan amount.

Another factor when choosing the most appropriate cash advance providing company is the time they usually give their clients to repay the advance amount. Repayment time starts at 4 months and some companies expect full repayment no sooner than 12 months after transferring the advance amount to their client’s bank account.

How much you can borrow

The most important factor when making the choice is how much money the provider is ready to transfer to their client’s bank account. There are various offers, starting at $5,000 and going as high as $500,000. Of course, the average loan offers are no more than $10,000. So if you need more funding, you will have to conduct thorough research to find the best option.

Time approval

Providers offer extremely fast & easy approval processes
Providers offer extremely fast & easy approval processes

As for approval time, this is also a considerably important factor. All providers offer extremely fast and easy approval processes that usually take one or two business days. Also, when using online forms of application, the process may take no more than 10 minutes and when applying via phone – no more than 24 hours. After the successful conclusion of the application, the money has to be transferred to your account. This may take one or several business days, usually no more than five.

Pricing and terms

Another important factor is whether the company is open and straightforward when doing business with their clients about pricing and terms. They should not insist on expensive merchant cash advance terms. They should work with you on the best options for your business. When many clients are willing to continue working with them, this is a good sign.

It should be noted that some providers require placing a lien on your business assets. This means that they can seized in case of a default on the loan.

Others may require that the business has some time, for example, a year, that still remains on the business office lease. Thus, they can be sure that the business will keep its present physical location. Therefore, advances provided by that particular company won’t be available to online businesses.


In conclusion, business owners should be aware that there are two important types of costs that are associated with merchant cash advance. The first one is the factor rate. This is the cost charged by the provider and it is multiplied by the amount of the merchant cash advance to get the total cost of what you owe to the provider. The second one is the retrieval rate, which is the percentage of the daily debit and credit card sales of the advanced business that goes to the provider. The first types of costs range from 1.13 up to 1.48 and the second range from 5% up to 50%.


Merchant cash advance leads

Merchant cash advance is different from loans
Merchant cash advance is different from loans

Merchant cash advance is a growing industry that allows small business owners to receive quick funds to finance their emergency purchases without having to apply to the major lenders and follow strict qualification criteria. Cash advances are being provided in exchange for daily payments that are a percentage of the sales made by these business owners. Although the industry was established in the late 1990s, it has significantly grown in the past couple of years. This is due to the recent financial crisis. All providers have an interest in finding out good deals for funding a small business. In order to achieve that, they use leads. Merchant cash advance leads are a necessity for the merchant cash advance providers.

Merchant cash advance is different from loans. Actually, they are the sale of a percentage of the future credit or debit card sales of the funded businesses. With the growth of the industry, the interest rates also went up to 30%. In order to prevent any legislation attempts from the different state authorities, cash advance providers came up with self-regulating standards.

The targeted market includes retail, restaurant, and service companies because they have massive daily credit and debit card sales. These could not qualify for traditional loans because of a poor credit score or lack of guarantees.

 merchant cash advance leads are of great importance
merchant cash advance leads are of great importance

Experts claim that the market has a further growing potential, while only 10% of which is worth more than $5 billion. Therefore, merchant cash advance leads are of great importance for all already established or brand new market players. Leads are being provided by third party lead verifying companies that operate with a data store of the potential customers’ business phones and other contact information. This way, lenders could contact their potential clients directly.

Such companies provide leads that contain details of business owners with high levels of daily credit card sales. The leads should also be interested in receiving a merchant cash advance. This makes things easier for advance providing companies because they don’t need to advertise directly via phone or spend money on telemarketing, reaching out to businesses who aren’t interested in their products. A much more convenient way would be contacting a live leads provider and thus saving both time and money. This involves acquiring information on business owners with a higher chance of qualifying for a merchant cash advance.

Those leads providing companies work with a trained team of experts who is able to follow the particular requirements of the cash advance providers to achieve their marketing and sales goals. Such companies work not only with media, online and public records and resources, but also use online questionnaires to fill out the lists of leads for cash advance potential clients. The lists are a subject of another filtering with the particular requirement of the client. Thus, both the provider and receiver of the cash advance would get exactly what they want. This is an excellent way to save time on advertising while spending more time on the actual selling of the product.

Merchant cash advance leads themselves are a product that is for sale. While cash flow is the biggest financial concern for business owners, merchant cash advance leads are the easiest, fastest and simplest way for establishing relations between cash advance providers and those in need of funding.

Merchant cash advance leads companies provide at least two contact possibilities for the leads- their business phone and email. They prefer businesses that have been established at least 6 months prior to the lead request and have a monthly volume that exceeds $10,000. These companies provide their clients with the company name, contact name, phone number and email of the business.

Leads that are being provided are of businesses having cash flow issues and requiring a fast funding source. Of course, they all have been thoroughly researched by the lead providing company’s team of highly trained experts and the list have been filtered in order to exclude those who aren’t appropriate to the needs of the merchant cash advance provider.

Lists of potential leads are being pre-ordered on a weekly basis
Lists of potential leads are being pre-ordered on a weekly basis

Lists of potential leads are being pre-ordered on a weekly basis so that they are always precise and genuine. Several network strategies are being used. Among them are keyword search, direct emailing and others. Thus, leads are perfected in order to be used by companies that are trying to establish a consistent marketing strategy. This strategy should aim towards delivering a steady flow of leads which will convert into predictable sales. Therefore, it is particularly important that the leads are fresh and open for merchant cash advance offers.

On the other hand, leads providing firms aim towards establishing not only precise lists of leads but also towards establishing a stable circle of clients among merchant cash advance providing companies. Such relationships are of mutual interest to all parties involved.

Experienced merchant cash advance leads providing companies work with highly trained experts who are constantly interacting with their clients so that they are able to provide the most efficient solutions, thus ensuring the success of their clients. Communication is done via phone and email. Communication is done via phone and emailThe leads providing industry is growing and there are more and more players on the market. Some of them have better reputation and are more experienced than others. They assist their clients in evaluating and eliminating risk. Some of them provide competitive prices for their services. Some use specially designed live transfer programs. Some of them work faster than others and are able to provide the leads lists within several days. Some of them work with fewer clients while others try to assist as many as possible.

There are also companies that have developed targeted mailing lists designed to help merchant cash advance providing companies with establishing their own custom strategy for interacting with potential clients. Some leads providing companies offer consulting service to further help their clients to successfully acquire a circle of clients among the small business owners. Initial consultations may also be free of charge as a bonus.

Merchant leads product list typically includes live transfer leads and merchant cash advance leads. Live transfer leads are merchants interested in obtaining funding while being checked for credibility. Merchant cash advance leads are being hunted via direct mailing and industrial partnerships.

Merchant cash advance regulations

The merchant cash advance industry is a comparatively new business and therefore hasn’t been strictly regulated yet. Nevertheless, there are some self-regulatory practices of the advance providing companies as well as some law provisions in state legislation.

Special licensing is needed by the law in the State of California. The regulation act is called the California finance lenders law. Its provisions state that if the agreement is structured as a true loan, a licensed finance broker may only broker loans to licensed finance lenders.

There are also certain certifications that are provided by the industry to salespeople who are trained in merchant cash advance lending practices. These certificates expire after two years and are a product of the self-regulation of the industry. Therefore, those who provide merchant cash advances are not required by the law to have such certification.

Regulation and the merchant cash advance industry

Regulation & merchant cash advance industry
Regulation & merchant cash advance industry

Many merchant cash advance providers share the opinion that pre-emptive self-regulation is necessary to prevent stricter federal legislation. Nevertheless, not much has been done yet in that aspect. Therefore, there isn’t a single act that regulates the providers of the product. This leads to various rates, holdback percentages and payments offered on the market.

Uniform training programs for advance providers could be a guarantee against potential lawsuits. Ethical practices learned by salesmen on training programs should be documented and certified, in case of an investigation or court trial.

Some salesmen aren’t even told about additional costs on these deals, such as transaction fees until they begin working with clients. Their training focuses only on rates and holdback percentages. This leads to the inability of providing precise information when advertising their product and merchants are unable to make a truly informed decision when choosing a cash advance providing company.

Merchant cash advances are not regulated as loans

Small business lending has various forms, each one having different terms and risks for lenders. Cash advances are one of these forms, having significant differences than other forms. They are not treated as loans and aren’t regulated by the same laws. Nevertheless, the loan market is changing and regulation may soon include merchant cash advances, especially their most common form – the one that is directed towards immediate purchases for the business owners.

The merchant cash advance market is flourishing

Merchant cash advance market is flourishing
Merchant cash advance market is flourishing

According to a bank report regarding merchant cash advance industry, this particular market is growing. To be precise, the market has doubled in the past two or three years. The number of individual advance contracts has increased significantly. This is partly due to the retreat of larger banks from small business lending, thus providing more space for smaller cash providers. They are also fast and efficient and business owners prefer working with them instead of bigger banks. Other factors that have contributed to the growth of the sector include the high approval rate, due to the less strict qualifying criteria that smaller lenders request. There also different collection practices that include periodic payments of a percentage of the business credit card sales.

Merchant cash advances did emerge as a result of the increase in credit card use in the United States and the first provider was established in 1998. For the next two decades, cash advances have developed characteristics that are different from those of other small business loans. One of them, for example, is the requirement of collateral for the loan. Nevertheless, cash advances are treated to be regulated like other loans and that may cause a shift in the direction of industry development. There is also an influx of competition in the market following the establishment of new market players.

Al these market changes are forcing different players to diversify their services by also offering various types of loans and lines of credit, combined with lower interest. Nevertheless, these changes won’t prevent merchant cash advance providers from achieving the expected 25% growth in years to come.

Regulation and online commercial lenders

State regulatory institutions are concerned with the growth of the merchant cash advance industry and various online lending platforms. They are worried that those may be the cause of new forms of predatory lending practices. California, for example, is considering the implementation of the non-bank lending act to regulate cash advance providers. Illinois is suggesting extending the power of the Department of financial and professional regulation over small business lenders.

Regulation & online commercial lenders
Regulation & online commercial lenders

Therefore, the largest among the providers aim at forestalling any new regulation. They claim that self-regulatory acts would be enough and no other legislation would be necessary. Nevertheless, experts and observers believe that legislation is inevitable because of the tremendous industry growth in recent years. Logically, the first states to implement any regulations will be those with the highest consumption of the product.

Online lenders not only have filled the vacuum that the recent financial crisis left in the small business lending industry, they also invented new benefits for their customers, such as online application process and algorithmic risk evaluation. Those made the lending industry faster and more efficient.

There are three new models of small business lending. These are the online balance sheet lenders that provide capital for inventory purchases, peer-to-peer lenders who link borrowers and investors directly, and lender-agnostic marketplaces where borrowers may shop and compare lenders online.

Although all the  innovation has proven to be beneficial for small business owners, there are also market players with a history of abusive conduct towards their clients. This includes aggressive marketing strategies or obscure terms in the contracts regarding fees and interest rates.

Therefore, the possibility of legislation at the state or even federal level seems inevitable. Recommendations are being made from experts to fill the gaps in the existing lending laws. Industry representatives aren’t excluded from the talks and their opinions are an important part of the legislation process.

A small, but firm step has been made in New York, where a new law requires that the local Department of financial services studies the lending industry and issues a report on their practices not later than the beginning of 2018.

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