Understanding a Merchant Cash Advance
A merchant cash advance, or MCA, is technically not a loan. A financing company will advance you the cash you need while taking a certain percentage of your debit card sales and daily credit limit. They will also charge a fee on top of this. A merchant cash advance is a quick and easy way to secure a cash advance without putting up any type of collateral. Even businesses with lower-than-average credit scores are usually approved for an MCA.
A Quick Look at MCAs
The first question most business owners ask is how much of a loan they can get. The answer is between $2.5K and $250K. Your merchant account will pay the loan back on a daily basis. The factor fee is between 1.14 and 1.18, and you can be funded in as little as two days from applying.
The Pros of an MCA
There are a number of pros when applying for a merchant cash advance. If you have bad credit, it will not usually be a problem, as bad credit applicants are still usually approved. The approval process is quick and easy, and you will have quick access to your funds upon approval. An MCA is also perfect for many business purposes.
The Cons of an MCA
There are a couple of facts to remember about MCAs, however. An MCA comes with higher fees than what traditional loans do. You will have less flexibility when it comes to changing merchant service providers. Cash flow will be reduced as well, due to the daily deduction of your credit card receipts.
Qualifying for a Merchant Cash Advance
Do you have a limited business history? A low credit score? Little or even no collateral to put up? Then a merchant cash advance may be the right solution to your financial needs.
Most small businesses will have no issues when it comes to qualifying as MCA providers typically offer easy eligibility standards. Plus, companies that receive a lot of their money through credit card payments, such as restaurants or retail store owners, can use a merchant cash advance for short-term financing. It allows you to have cash ready in the event of unexpected payments, inventory purchase, and debt payments.
The typical applicant will have an annual revenue of over $180K and a credit score of 550. They will typically have been in business for over two years before they apply.
How to Apply for an MCA
An MCA company will take a look at your current and past credit card statements to ensure that you are getting the right amount of volume to your business in order to approve you for the loan. This is because a merchant cash advance is paid back through your daily credit card sales. Many companies will look at your bank statements and will require a credit check.
A merchant cash advance application will be filled out online. Applications are approved the very same day you apply with the company. While getting a merchant cash advance is fast and simple, MCAs are known for their high cost of capital.
What Documents Will I Need?
You will need to have the following when you apply:
•Current Driver’s License
•Voided Business Check
•Business Tax Returns
•Credit Card Processing Statements
•Current Bank Statements
How a Merchant Cash Advance Works
Many businesses depend on loans to pull them through hard times. However, other loans take time to be approved- something you may not have at the moment. Additionally, you may not even qualify for them.
A Washington merchant cash advance allows you to get the cash you need quickly and easily. If you believe that you will not qualify for a traditional loan, or you simply do not have the time to wait for approval, then a merchant cash advance could be the perfect choice for you.
The merchant cash loan provider will provide your business with a lump sum of cash upon approval. In exchange for the cash, the provider will then take a portion of your daily debit and credit card sales as payment. The provider can simply take the money directly from your business bank account or the credit card processor. This makes them easy loans to deal with, especially for busy business owners.