Merchant Cash Advance
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Unlocking Growth with Merchant Cash Advances
Small businesses often face challenges like broken coffee maker in the coffee shop, AC that stops working, fluctuating revenue, unexpected costs, or the need for quick inventory investments. That’s where a merchant cash advance (MCA) can be a game-changer.
An MCA is a short-term financing option for businesses that accept card payments. Unlike traditional loans, an MCA allows businesses to repay the borrowed amount through a percentage of their daily card sales, plus fees.
Repay as You Earn: Only pay when you sell
A provider offers an upfront sum based on a business's factor rate.
Repayments made automatically from your card machine or online sales until the advance is paid in full.
Repayments are made through a fixed percentage of daily card sales, typically ranging from 10% of each transaction.
Repayment periods usually span from 3 - 18 months, depending on sales volume.
Benefits:
Flexible Payments: Aligns with daily sales, making it easier during slow periods.
Quick Access: Faster approval and funding compared to traditional loans.
Versatility: Can be used for various business needs, from equipment purchases to marketing campaigns.
Separate Finances: Helps maintain a clear distinction between personal and business expenses.
Build Credit: Positive repayment history can boost business credit scores.
Drawbacks:
Cash Flow Impact: Daily deductions can strain cash flow if sales are low.
No Early Repayment Benefits: Fixed fees mean no savings for early repayment.
Contract Clarity: Factor rates and repayment terms can be complex.
Card Transaction Limitation: Only applies to card sales, excluding cash transactions.
Costly: Higher fees and rates compared to traditional loans.
MCAs are ideal for businesses with high card transaction volumes, such as retail shops, restaurants, and service providers like carpenters or plumbers. They’re designed for short-term financial needs and should be used wisely.
To apply, businesses need to complete an application and provide recent bank statements. Once approved, funding terms are provided directly to the business.
Helping you choose the right funding to match your business goals
