Merchant Cash Advances Same Day Funding Direct Lender

A merchant cash advance is a type of financing that allows businesses to borrow money based on their future credit card sales. The repayment terms are typically structured as a percentage of daily or weekly credit card sales, making them very flexible and easy to repay.

When You Should Consider a Merchant Cash Advance

There are many reasons why businesses might consider a merchant cash advance, but some of the most common include:

– To cover unexpected expenses or emergency repairs

– To purchase inventory or supplies

– To take advantage of opportunities or seasonal spikes in sales

– To consolidate debt

What Are The Qualifications and prerequisites?

To qualify for a merchant cash advance, businesses typically need to have been in operation for at least six months and process a minimum of $5,000 in monthly credit card sales. Some lenders may also require businesses to have a minimum credit score.

Application process

Businesses will need to follow the below detailed steps to apply for a merchant cash advance:

Research lenders and compare rates and terms:

Several lenders offer merchant cash advances, so it’s essential to compare rates and terms to find the best deal.

Gather financial documents:

Lenders typically require businesses to provide financial statements, tax returns, and bank statements to assess their creditworthiness.

Apply:

Once you’ve gathered the required documents, you can apply to the lender of your choice.

Get approved:

The lender will deposit the funds into your account if your business is approved for a merchant cash advance.

Repayment terms

As mentioned earlier, repayment terms for merchant cash advances are typically structured as a percentage of daily or weekly credit card sales. This means businesses will only need to make payments when they’re generating revenue, which can be very helpful during slow periods.

What Are The Rates and fees?

Merchant cash advance rates and fees can vary depending on the lender, but they’re typically between 10% and 30%. For example, if you borrow $10,000 at a rate of 20%, you would need to repay $12,000 over 12 months.

Does a cash advance affect credit score?

A merchant cash advance will not directly affect your credit score, but it may be reported to the credit bureaus if you default on the loan. Therefore, ensure that you have a repayment plan before taking this loan to avoid ruining your credit score. If you repay according to the agreement, some lenders will report the repayments to the credit bureaus, which may help improve your credit.

Is a Merchant Cash Advance Right for Your Business?

As with any financing, it’s essential to weigh a merchant’s cash advance’s pros and cons before making a decision. Some of the potential benefits of an MCA include:

Quick and easy access to capital

– No collateral is required

– Flexible repayment terms

– No fixed monthly payments

On the other hand, some of the potential drawbacks of an MCA include:

– High rates and fees

– Short repayment terms

– Potential impact on credit score

What Are The Alternatives to Merchant Cash Advances?

There are several alternative financing options available to businesses, including:

Traditional bank loans:

Bank loans typically have lower interest rates and fees than merchant cash advances, but they can be more challenging to qualify for.

SBA loans:

The Small Business Administration offers several loan programs that can be helpful for businesses. However, these loans often have stricter requirements, such as collateral and a personal guarantee.

Business credit cards:

Business credit cards can be a good option for businesses that need to make small purchases or have access to revolving credit. However, they typically have high-interest rates and fees.

Invoice financing:

Invoice financing can be a good option for businesses that have outstanding invoices. With this type of financing, companies can receive a portion of the invoice value upfront and repay the loan when the invoice is paid.

How do merchant cash advances work?

A merchant cash advance is financing that allows businesses to borrow money against their future credit card sales. Repayment is typically structured as a percentage of daily or weekly sales, meaning companies will only need to make payments when generating revenue. Merchant cash advances can be a helpful way for businesses to access capital, but they typically come with high-interest rates and fees.

Can I Get a Merchant Cash Advance With Bad Credit?

Yes, getting a merchant cash advance with bad credit is possible. However, because merchant cash advances are considered high-risk loans, you may be charged higher interest rates and fees. It’s important to compare lenders carefully before choosing one to ensure you’re getting the best deal possible.

What Is the Difference Between a Merchant Cash Advance and a Business Loan?

The main difference between a merchant cash advance and a business loan is how repayment is structured. With a merchant cash advance, repayment is typically structured as a daily or weekly sales percentage. This means businesses will only need to make payments when they’re generating revenue, which can be very helpful during slow periods. On the other hand, business loans typically require fixed monthly payments, regardless of how much revenue the business generates.

What Are the Requirements for a Merchant Cash Advance?

The requirements for a merchant cash advance vary from lender to lender, but there are some general standards that most lenders will require. These include:

– A minimum monthly credit card sales volume

– A minimum time in business

– A personal guarantee

– Collateral

Where Can I Get A Merchant Cash Advance?

Several lenders offer merchant cash advances. These include:

Online lenders:

Several online lenders offer merchant cash advances. One of the main benefits of working with an online lender is that you can often get funding more quickly than a traditional bank.

Local banks:

Some local banks offer merchant cash advances, although they tend to be more selective in the businesses they work with.

Alternative lenders:

Alternative lenders are another option for businesses seeking merchant cash advances. Alternative lenders typically have more flexible requirements than banks and may be willing to work with companies with bad credit.

 

Personal Finance Writer at ACFA Cashflow

Cathy Pamela Turner has extensive expertise in banking, finance as well as accounting. A large portion of her experience was spent within commercial banks, where she worked in the roles of an underwriter credit Risk Policy Manager director of credit risk, chief credit executive, and many more. Throughout her banking career Cathy not only reviewed different kinds of commercial and personal loans, but also created and monitored policies about the origination of these loans and how they were controlled.