A merchant cash advance is a form of working capital finance in retail businesses can receive an advance against future revenue through a card terminal or online merchant account.
It is not a loan, rather the sale of future revenue repaid through a daily split of card revenues. Loan amounts range from 70-140% of your monthly revenue through a card terminal, with repayments being deducted daily directly at the point of sale, before the funds reach your businesses account.
As the repayments represent a portion of daily sales, you shouldn’t need to worry about being burdened with large repayments you can’t afford, making merchant cash advance a good fit for businesses with a lumpy cash flow that would otherwise struggle to meet regular daily/weekly repayments of working capital loans.
Merchant cash advance funding is a quick, easy, and, straightforward process from start to finish. Whilst traditional lenders will go through a significant underwriting process, evaluating financial statements, business bank accounts, and cashflow plans. Merchant cash advance providers consider only two simple criteria: monthly credit card returns and length of time in business. We do not fund start-ups which are defined less than one year in business.
Merchant cash advance credit assessments are primarily based on the volume of revenue coming through your merchant terminal. MCA providers will still take a view on lending your business money, even if your business is already highly geared or is not yet profitable. This pragmatic approach allows any stable business to qualify for an advance
Because there is so little paperwork to process, merchant cash advances offer a fast turnaround. Depending on your merchant terminal provider, some loans can be turned around in a few days. While commercial loans can take weeks or even months to process. Merchant Cash Advance usually processes within one hour and can fund same business day.
“Have your customers repay the loan” This represents one of the key advantages of a merchant cash advance over a commercial loan. This percentage-based collection policy allows the MCA to be priced into the cost of your product. If you don’t sell anything that week, you don’t pay anything that week. While the loan requires a fixed monthly payment, MCA collection amounts fluctuate based on the amount of revenue you receive through your terminal. In high revenue months, the MCA retrieves a higher monthly sum and in the tighter months, the MCA scales back proportionally.
What does a business need to qualify?
• Over 3 months in business
• Over $20,000 in average monthly sales
• Credit score above 500
• Active business bank account
• Less than 5 NSFs/Overdrafts/Negative Days per month
What loan documents will be required prior to funding a business?
• Signed application*
• 3 months of business bank statements* (12 months if seasonal)
• Driver’s License and Voided business check*
• Business Lease Agreement
• Signed Contract* (issued after client accepts offer)
• Tax Returns for Loans above $50,000
• Business Licenses (if applicable)
• If there are Tax Liens, copies of payment plans with IRS
*Documents required in all cases
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