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Merchant Cash Advance

Merchant cash advances are not loans but instead a business-to-business transaction that involves the selling of a company’s future credit card sales or a portion of the company’s bank deposits to a commercial lender in exchange for an upfront lump sum of funding at a discount. Loan sizes range anywhere from $5,000 up to $2,000,000 with terms ranging anywhere from 3 months to 2 years. Repayment for these transactions are usually made every business day (sometimes weekly) by an automatic deduction from a company’s credit card sales or bank deposits.

This financing tool is usually used by small and medium-sized businesses that have a time-sensitive cash crunch, because approvals for merchant cash advances can take as little as 2-24 hours, with funding in as few as 2-5 business days. Since this type of commercial financing is cash flow driven, a company get approved even with poor personal and business credit. This financing tool is usually used by small and medium-sized businesses that have a time-sensitive cash crunch, because approvals for merchant cash advances can take as little as 2-24 hours, with funding in as few as 2-5 business days. Since this type of commercial financing is cash flow driven, a company get approved even with poor personal and business credit.

There are a number of advantages to merchant and business cash advances. Regardless of business and personal credit, nearly all applicants are approved for some sort of cash advance financing. The simplicity and speed of the process is fairly painless, with much of the process handled online, over-the-phone, or by use of email. Minimal documents are required, and sometimes all that is required is to verify your bank account. Because there are no restriction on how the company uses the business cash advance, oftentimes this type of financing is used as a bridge until more permanent traditional financing is put in place. By using this financing facility as a bridge loan, small and mid-size businesses are meet their cash flow needs when there is a dip in receivables.

  • Factor Rates: 1.16 - 1.50
  • Terms: 3-24 months
  • Loan Amounts: $5,000 – $2,000,000
  • Time to fund: As Little as 1 Business Day
  • Repayments: Daily or Weekly
  • Collateral Required: No
  • Time in Business: As little as 6 months
  • Existing Advance: Usually
  • Tax Liens Acceptable: Yes
  • Industries Funded: All
  • Restrictions on Uses: No
  • New Funds After 50% Paid: Usually

Approval Rates

ACH LendersUp to 95%
MCA LendersUp to 95%

Pros

  • Fast approvals
  • Fast funding
  • Minimal underwriting and due diligence
  • Minimal documents required
  • Nearly all credit-types acceptable
  • Will fund even with tax liens
  • Entire process can be handled online
  • Funds wired directly into business account

Cons

  • May be expensive
  • Requires daily repayment (or weekly)
  • High fees
  • Can prevent attempts to get traditional financing
  • Blanket lien on all business assets
  • Interest is not tax deductible
  • May stress cash flow
  • Short repayment terms

Get a Merchant Cash Advance

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