Merchant Cash Advance Guide

Merchant Cash Advance Guide

When things are going well, your business has the cash flow you need to grow and be successful. However, tight transitions and lean times may leave you in need of a cash infusion. One of the most advantageous options is a merchant cash advance.

What is a Merchant Cash Advance?

A merchant cash advance (MCA) is when a business is given a cash advance by a lender to cover necessary expenses. Then, the lender takes payments from credit card receipts, usually daily, based on an agreed-upon amount.

MCA Advantages

There are several advantages associated with MCAs, including:

  • Get cash fast: funding is typically delivered within hours of approval, which is good news for those who don’t have time to wait for a traditional lender to process the application
  • Little to no paperwork: everything is digital, which means you don’t have to print, fill out, or fax/mail the application
  • Repayment is flexible: repayment is never a fixed amount, but is based on a percentage of sales
  • High approval rates: more likely to get the cash you need unable to qualify for a traditional loan.
  • Perfect credit not required: the economy has its ups and down and many people have poor credit, it’s important to note that MCAs require that the borrower pledge a percentage of future sales to pay it.
  • No collateral required: approval is based on past credit card sales- if they were strong, you’re more likely to be approved.

MCA Disadvantages

On the other hand, MCAs also have a few disadvantages:

  • High-interest rates: pay attention to repayment terms so that you now exactly when I joined.
  • Unregulated history: since repayment terms are tied to credit card sales, this type of funding is unregulated- so do your research
  • Fees: fees vary from one MCA to another, so make sure you’re getting the best deal.

How to Get an MCA

If you decide that an MCA is right for your business, start the process. The application process is fairly simple. Start with making arrangements with a credit card processor. Then, fill out the application and submit it.    When you get your approval, read the contract and, if the terms are acceptable, sign it. If you need more help understanding MCAs, contact Charis Commercial Capital today.


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