Business Cash Advance

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Many small to mid-sized businesses have trouble juggling merchant cash on hand with current and future financing requirements. These issues are even more difficult for a small business owner with lower business credit history. A Business Cash Advance, also known as merchant cash advance empowers companies who accept credit card payments (debit card sales ok as well) by allowing them to advance merchant cash quickly. How? A cash advance works by enabling a business to sell a portion of its projected sales. This is not considered like other small business loans or lines of credit, but an alternative short-term business funding option.

The basics of merchant cash advances are reasonably straightforward. In exchange for a lump sum of merchant cash, a business will offer a percentage of its daily sales income. This percentage is collected directly by ACH payment for business cash advance and for merchant cash advance from merchant processor future credit card sales. This process continues until the balance is paid. If you are a seasonal company that needs better merchant cash flow control, merchant cash advance and business cash advance are perfect for your business needs. These companies have continually fluctuating sales and a merchant cash advance is an ideal solution for short-term, seasonal, or sale initiatives.

The terms, percentage options, score requirements, and overall facets of a business cash advance are extremely similar to an Merchant Cash Advance. So, you’ll likely see us refer to these two interchangeably. The biggest difference is how you would repay the advance, with an Merchant Cash Advance relying on a percentage of future daily credit card receivables while a Business cash advance is broader, relying on overall sales. However, they are one and the same accept for payment retrieval. Although merchant advance has some features of a short term loan, it is not, because if the sales cease of the business then you are no longer obligated to repay any remaining balance unlike a loan. This product is not available to startup businesses.

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How Does a
Business Cash Advance Work?

A business cash advance (BCA) – also called a Purchase of Sales Agreement – is an advance amount based on the purchase of the merchant’s sales at a discount. This means that the business owner is responsible for paying back the specified fixed payback amount, which is higher than the amount that the lender advanced for the company. 

What’s the difference between the advance amount and the payback amount? The factor rate. The factor rate is a fixed cost, meaning it’s not a principal cost or an interest cost. Instead, the advance is repaid by taking a fixed percentage of the deposits called the specified percentage. 

Then, the payments are collected by an ACH payment which deducts from the bank account listed on the specified percentage of sales. At the end of each month, reconciliation can occur. Reconciliation occurs if the fixed payments taken out of the account are more than the set future percentages of monthly sales, allowing the business to request a refund back to the merchant account for overpayment to ensure that the set specified percentage of sales matches the revenue volumes. Repayment continues until the payback is paid back in full. 

Keep in mind that there is no time limit with advances since the fixed payback percentage doesn’t adhere to traditional business financing but to net working capital (NWC), cash flow, and fast funding. Simply put, a BCA is not a typical loan option small businesses may typically opt for; instead, BCA is a short-term business financing alternative.

Business Cash Advance Product Overview

Rate: Range from 1.09% up to 1.45% (not interest rates)

Repayment Terms: There are no time limits; payments continue until paid in full based on specified percentage collection method and future revenue

Origination Fees: Range from 0% to 3%

Payment: Daily or Weekly fixed payment (can be adjusted monthly based on sales revenue

Minimum Score Ranking: All history considered; ranging from poor to excellent

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How a Merchant Cash Advance Works?

Merchant Cash Advance, also known as a Purchase of Future Sales Agreement, operate very similarly to Business Cash Advance, but the most significant difference is the repayment process, which is connected to the future credit card payments instead of overall sales. Merchant cash advance right for you if your small business receives significant monthly charge card sales revenue. A merchant cash advance cost is not an interest rate, but a factor rate. Merchant cash advance is not available to small businesses that don’t have a merchant account and don’t accept business credit card sales from customers regularly. Merchant cash advances take a set percentage of daily credit card sales and are taken by the merchant cash advance provider at the time of batch until the advance is paid back in full. Small businesses find this valuable when they have to fluctuate monthly credit card sales and don’t want to be locked into a payment that could negatively impact cash flow or margins of profit if revenues decline or fluctuate. Reminder, advance a merchant cash advance isn’t categorized with business loans, Line of credit, but an advance made by selling a portion of the company’s credit card sales at a discount to a funder in exchange for money now. This product is not considered asset based loans.

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Merchant Cash Advance Product Overview

Factor Rates: Ranges from 1.09% up to 1.45% (not interest rates)

Repayment Terms: There are no time limits; payments continue until paid in full based on specified percentage collection method and future revenue

Origination Fees: Range from 0% to 5%

Payment: Percentage of future credit card revenue

Minimum Score Ranking: All history considered; ranging from poor to excellent

Time in Business: 6 months or more

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Business Financing Options and Benefits of Business Cash Advances and Merchant Cash Advances

  • Lightning-fast approval to fulfill business needs. Funds deposited same day at funding.
  • Funding for owners with less than perfect credit to bad credit
  • A merchant cash flow option for businesses that get their annual revenue primarily through credit card transactions (debit card sales ok as well) or want a fixed payment adjusted to monthly sales.
  • No term limits
  • Reasonable, competitive terms
  • Simple application process
  • Access to working capital for any reason
  • Only business assets pledged, not personal assets
  • No personal guarantee
  • Payment history not reported to personal credit bureau

Many of our clients need cash fast. While it may be ideal in the long run to obtain a business loan, merchant cash advances are the absolute quickest financing option on the market. So, here are some reasons why business owner may want to consider this option.

Reasons Why a Small Business Owners
Chooses a Merchant Cash Advance

Small Businesses can’t qualify for traditional small business loan.

Business owners know just how difficult it is to be eligible for traditional bank loans or other traditional loan institutions. Established businesses that are growing or trying to keep up with seasonal spikes need a way to fund there business. If not, their company could suffer immensely or tank altogether which is where a cash advance can help as the payments fluctuate to current sales volumes.

Merchant cash advance has a low personal credit score requirements.

Many small business owners try first with banks for a business loan. However, eventually, they run into qualifications such as poor personal credit and appropriate business credit bureaus. Spending all of this time and effort just to be denied for poor credit history can be devastating. We have you covered. As long as a business has been established for six months or more, AdvancePoint Capital will take care of your needs even with poor credit scores. A business cash advance is an ideal solution for those struggling with credit score requirements.

Merchant cash advance can provide the capital needed fast.

As we’ve mentioned, a business cash advance is the fastest option that a business can get for cash flow problems. Many retailers and merchants need short-term due to the nature of their model. A merchant cash advance enables businesses to receive fast money from funders without making them wait around or jump through hoops. Whether it’s through credit card receivables or overall sales, you can get a cash advance fast.

Frequently Asked Questions About
Merchant Cash Advance

The fast, convenient, and straightforward way to get the money you need for your small business – now!

Get your quote today by filling out our simple form.

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The Business Cash Advance Process

The BCA process is fast. Within 1 to 2 business days, a small business can receive the merchant cash flow you need to keep the ball rolling. Unlike traditional financiers, we don’t require tax returns. In addition, poor credit will not affect you. No more hours of paperwork or years of intensive records to dig through in order to get the finances you need — a BCA is waiting for you. Our easy-to-access online application makes the process fast and simple. All you need to do is fill out the form, giving you instant access to capital without an in-person consultation. AdvancePoint Capital is a business cash advance provider.

All we need from you for a Merchant Cash Advance is:

  • A submitted one-page application that can be found on our website
  • Proof that your business has been established for six months or more
  • Your most recent Merchant Credit Card Statements and/or Business Bank Statements

That’s all folks! At AdvancePoint Capital, it’s really that simple.

How do I get cash advance for my business?

AdvancedPoint Capital is a merchant cash advance provider. We understand how difficult it is for small business owners to get a foothold where they need it. It’s for this very reason that we got into alternative financial services. We know that companies like yours shape the economy — providing products and services while also creating much-needed jobs. Our financial solutions like Merchant Cash Advance are convenient, simple, and fast so that you can receive the capital you need to keep the gears of the economic wheel turning.

Does your bank fail to offer your company the financing options you need on a timeline that works for you? Or perhaps your credit isn’t high enough to receive the funding you need. Contact AdvancePoint Capital today so that your company can obtain the financing it needs faster than ever before. You’ll have your hands on cash quickly. Fill out our simple form, or give us a call at (800) 381-8290. Our helpful and friendly representatives are available to assist you 24/7. Call today!

What Is the Difference Between a
Cash Advance and a Loan?

The main difference between a cash advance and a loan is that you don’t need to go through a formal application process and a credit check to access funding with an advance. Cash advances are faster and easier. But they usually also involve more interest and additional fees. 

As a small business owner, you have multiple options for different types of loans, including a secured loan, a short-term loan, or even personal loans. In all these cases, your lender deposits the amount in a bank account, and then you make monthly payments for a set term.

This process is straightforward. But, it can be time-consuming, especially when taking out a business loan.

With traditional loans like these, you accrue interest depending on the Annual Percentage Rate (APR) and pay the loan back in monthly installments. You can borrow money for both immediate needs and larger purchases, and both secured and unsecured loans are available.

Or you can get an advance. An advance is usually used as alternative financing by small businesses that need emergency business cash flow. They might not have time to wait for a short-term business loan from the bank. So instead, they can opt for a merchant cash advance or credit card cash advance.

Let’s dive into more specific differences between a small business loan and a merchant cash advance.

1) Method of Repayment

Both bank loans and merchant cash advances are provided by banks, any credit union, and online lenders. Credit card cash advances are an option if your card’s credit limit is high enough. However, you’ll want to repay your credit card issuer right away to avoid your card’s high-interest rate.

To repay a traditional loan, small business owners can make an automatic monthly payment from their bank accounts. You can also cover the payment amount through a check or wire transfer.

Merchant cash advances require you to pay the advance back through a percentage of your future credit card sales. You make daily or weekly payments to repay the debt through your credit card processor.

2) Repayment Period

When small or medium-sized businesses take out a new loan, they have a fixed amount of time to pay back the entire loan amount. In most cases, bank loan terms range from one to 30 years.

Advances do not have a fixed period. How long the repayment timeframe lasts depends on your revenue. Because the repayment amount is based on your daily card sales, you’ll pay back the advance faster when your revenue is high. 

3) Interest Rates

With business loans, you’ll pay less in interest and fees than you would with an advance.

A business or personal loan has a fixed or variable interest rate, and interest accrues on your principal. If you can afford to repay the loan early, you can pay even less in interest overall. Although, it’s important to note that some loans have penalties for early repayment. 

Since advances are designed to act as quick funding or short-term financing, they are more expensive. You will pay a percentage of your daily or weekly revenues to cover the full amount due (your advance and the initial lump sum finance charge).

There’s no APR or periodic interest charge. The amount you owe is based on a factor, which usually ranges from 1.2 to 1.5 of the original advance. So, for example, if you get an advance of $18,000 at a factor of 1.2, you’d owe $21,600. At a factor of 1.5, you’d repay $27,000.

Because this charge is added when you get the merchant cash advance, you can’t repay early and save. 

4) Credit Scores

When you apply for a loan with any financial institution, they’ll check with the credit bureaus to ensure you have a good personal credit score. When you accept the loan, you’re making a personal guarantee you will pay the debt back, and defaulting can significantly impact your ability to qualify for future loans.

Advances don’t require you to have a good credit score to qualify, but defaulting will hurt your chances of future funding.

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