Merchant Cash Advance
So you are considering a business loan for additional business capital, but have you ever considered a merchant cash advance ?
What is a merchant cash advance?
A merchant cash advance (MCA) is basically a form of working capital or a loan which
is offered to small or medium size business in exchange for an agreed upon percentage
of the future credit card or a debit card sales. In fact, a merchant cash advance is not exactly like a conventional business loan, a merchant cash advance is usually for leveraging future credit card sales, purchase orders, accounts receivables, used as a business equipment loan, etc….
Merchant Cash Advance Provider
Such that a merchant cash advance provider will offer a business an upfront business loan amount or a lump sum of business cash, the business owner repays the merchant cash advance via a small percentage of every sale made until the business cash advance is paid back in full. Merchant cash advances provide an easy, convenient and a swift way to acquire
working capital for small and medium size businesses, it is short term business financing which in usually repaid in a span of less than 18 months. The merchant cash advance is paid back upon a percentage of each debit or credit card sale which is convenient with the flow of the business and mainly through various repayment methods such as the split withholding method,lock box method, or through an ACH withholding method.
Merchant Cash Advance Rates
Normally the merchant cash advance loan payments are drawn from the business owners customers debit and credit card purchases on a regular or daily basis until all the amount of the merchant cash advance has been paid back. This is done directly from the merchant processor which clears and settles the credit card payment. Since most of the merchant cash advance companies and alternative business loan companies that provide these services are not bound by conventional business loan regulations, allows these companies to charge a larger rate of interest as they are usually approving higher risk business loans. Merchant cash advance companies tend to charge higher interest rates than the banks and other major financial institutions, there are still many other great benefits this method of business financing has compared to a conventional business loan. First and foremost, the payments are proportionate to the merchants sales volume, thus offering the merchant a more flexible repayment plan while allowing them to easily manage their business cash flow as well. Secondly, these kind of merchant loan advances are processed faster than the conventional business loan. Furthermore, these modes of business funding provide a convenient source of business capital for those business owners which do not qualify for the traditional business bank loans.