One quick and easy way that Mississippi business owners can access cash is by means of a merchant cash advance. In some ways, it is similar to a loan. However, it is not repaid in the same way that a traditional loan is repaid. It is paid back as customers make payments using a credit or debit card. A set percentage along with a fee is taken out each time a card is swiped when purchasing products or services from the business. 

The Benefits and Disadvantages of MCA’s 

Merchant cash advances can be an easy way for a business owner who doesn’t have good credit to get quick cash to be used for the business. Bad credit is often accepted. The approval process is usually easy and is suitable for a variety of businesses. This option makes sense for individuals who do not want to put their financial assets, including their home, at risk. 

Because the loan is paid back when customers make payments with debit and credit cards, one downside of a merchant cash advance is that the business will not have the same cash flow to work with. The fees are often higher with an MCA than with a traditional loan. And one other downside is that there is not as much flexibility to change merchant service providers. 

Do You Qualify for a Merchant Cash Advance? 

As you look at the benefits and disadvantages of this type of loan, you may wonder who qualifies for it. It is often a good option for individuals who are facing financial problems and do not have collateral, have a low credit score, and may have not been in business for a long period of time. The eligibility standards are usually quite easy to meet. In most cases, small business owners do not have a problem qualifying for this type of cash advance. 

A business owner who has customers who make most of their payments with a credit or debit card is usually in a good position to qualify for this cash advance. Individuals who own retail stores and restaurants usually have customers that pay in this way. 

The money that is borrowed can be used to pay back debts, purchase inventory, and cover unforeseen expenses. Most customers who are approved have a credit score of about 550, they have been in business for two years, and they have an annual revenue of $180,000. 

The process of applying for a merchant cash advance is simple. Some of the things that you will need to have on hand include your driver’s license, credit card statements, bank statements, the tax returns for your business, and a voided business check. Your credit score will likely be checked. 

Companies that provide MCA’s are going to look at your credit card statements with the goal of making sure that amount of money your customers pay using their credit card will be enough volume in order to pay back the merchant cash advance. 

Most repayment time frames are anywhere from four to 18 months. This will depend on the business and other factors. Shorter repayment terms provide the benefit of paying back the lender more quickly. However, this will make the cash flow tighter. It is good to look at the numbers and then determine a term that is best for the needs of your business. 

Is It Worth It? 

Almost all small businesses could use some extra capital. A merchant cash advance may be the right financial tool to help the business owner purchase needed inventory or to pay off debts. 

Merchant cash advances make sense for many Mississippi business owners. The advance allows them to have access to quick cash and to pay that cash back slowly as their customers make purchases. It is usually easy to qualify for and does not require you to have the best credit score. On the other hand, these are usually the most expensive loans to repay. It is good to get familiar with how much will be taken out each time a purchase is made and to find out what other fees will be applied. You also have less money to work with in the months that the loan is repaid.