Merchant Cash Advance

Merchant Cash Advance Key Features

• Flexible Repayment: Repayment is tied to revenue, adjusting with business fluctuations.

• Quick Access to Funds: Providers receive quick access to capital, usually within a short approval and funding timeline.

• No Fixed Monthly Payments: Unlike traditional loans, MCAs typically do not involve fixed monthly payments.

• Factor Rate: The cost of the advance is expressed as a factor rate, representing the total repayment amount.

How Merchant Cash Advance's Work

-Application and Approval:

• Application Process: Providers apply for a Merchant Cash Advance, providing information on credit card sales, business performance, cash flow, revenues and other relevant details.

• Underwriting: Lenders evaluate the business's sales history and overall financial health for approval.

-Funding:

• Lump Sum Transfer: Upon approval, the provider receives a lump sum directly into their business account.

-Repayment Structure:

• Daily/Weekly Withholding: Rather than fixed monthly payments, a percentage of sales is automatically withheld on a daily or weekly basis to repay the advance.

• Factor Rate Application: The factor rate determines the total repayment amount, applied to the advanced sum.

Advantages & Considerations

Advantages:

• Cash Flow Flexibility: Repayments align with sales, offering flexibility during slower business periods.

• Quick Access: Rapid access to funds can address immediate financial needs. Get funded in at little as a few hours.

• Not Credit Driven: Clients with low credit scores can usually get approved as long as their business cash flow is strong.

Considerations:

• Higher Cost: The factor rate may result in a higher overall cost compared to traditional loans.

• Revenue Impact: Repayment can impact cash flow, requiring careful consideration.