Every business needs cash to operate, but small businesses frequently need infusions of cash in addition to normal revenue flows to help them thrive and work toward their long-term goals. An excellent source of needed cash can be a merchant cash advance (MCA).  

A merchant cash advance is suited for businesses that secure much of their revenue using debit and credit card transactions. It can be ideal for a business that needs smaller amounts of funding, for those businesses needing fast funding because an MCA can be deposited to your business account in as little as 24 hours, for businesses that have lower credits scores, and for business owners that do not have collateral for other types of loans.  

What is a Merchant Cash Advance? 

merchant cash advance is an alternative form of financing that is different than a traditional loan from a bank or credit union. It is an upfront amount of cash provided against future credit card receipts and will be repaid using a percentage of debit and credit card sales plus a service fee.  

How Can a Merchant Cash Advance be Used? 

There are no restrictions on how a merchant cash advance can be used. An MCA can be used to purchase inventory or raw materials, buy or upgrade equipment or technology, hire new staff, invest in employee training, expand marketing efforts, relieve cash flow pressures, address unforeseen expenses, or take advantage of new growth opportunities.  

How Does a Merchant Cash Advance Work? 

merchant cash advance lender will examine your business’s current and projected credit card receipts, review how much money you need, and determine how you will be able to pay them back. You will sign a contract defining the amount you are getting, and the service fee required to pay them back. 

The amount of funding provided is called an advance and it can be less than, equal to, or greater than your monthly credit card sales. It is critical to assess your ability to pay back this advance in a timeframe that you are comfortable committing to. Repayment periods typically range from three to 18 months. The payback amount will be greater than the advance amount due to the addition of a service fee, called a factor. The factor will generally be higher than the interest rate required for other types of loans. The factor rate will depend on your years of business operations, business financials, the industry you operate in, and your business credit score.  

Pros of a Merchant Cash Advance 

  • Get cash fast. 
  • Little paperwork and fewer loan requirements. 
  • High approval rates. 
  • Repayment is based on a percentage of your credit card sales instead of a fixed loan payment. 
  • Perfect credit isn’t required. 
  • No collateral is required   

Get Expert Alternative Financing Assistance 

Contact Multiple Financial Solutions, with offices in Jacksonville, FL, and Houston, TX. We offer a portfolio of alternative funding solutions for companies that can’t get funding from banks including business lines of credit, merchant cash advances, and commercial real estate funding. We focus on businesses that have been active for 2+ years and are looking to grow to the next level. If you are facing a funding deficit, we are ready to help you.