What is a Merchant Cash Advance (MCA)?

Merchant Cash Advance MCA (also now as a Future Receivables Purchase and Sale Agreement) is an advance of a lump sum of money to a business in exchange for a fixed set percentage of the businesses’ future daily credit card sales until a greater amount than a lump sum (a specified amount) is paid back in full. the difference between the lump sum upfront and the specified amount or payback amount is called the factor cost or flat cost of funds. Merchant Cash Advances are not based on principal & interest rates. rather it’s a flat fee or cost. There is no early pay discount if paid back in full unless specifically stated in your merchant cash advance agreement. A merchant cash advance does not loan against daily credit card transactions because it is not a loan, but a cash advance funding. It is incorrect that Merchant cash advances have no personal guarantee, rather a business owner’s performance guarantee only.

Merchant Cash Advance: Product Overview

Rate: 1.10% up to 1.45% Factor Rate (This is not an interest rate)

Terms: No term limits estimated payback periods are 6 to 18 months

Fees: Typically 1% to 3% Origination Fees

Payment: Set percentage of future card volumes

Credit Standards: All business credit types from Poor to Excellent is considered. Not score driven.

Documents: One page Application,  merchant account processing statements, business bank statements

Merchant cash advances are a great way to receive cash flow fast, without needing to fuss around with banks or slow lenders. Furthermore, a business loan is a tough code to crack without the right personal or business credit score. The system can be tedious and eventually devastating for small businesses that need cash advances quickly. With AdvancePoint Capital, you’re able to speed up the process with alternative finance options that work for you.

We’re here to partner with your business and help you navigate the challenging financial roadmap. Choosing between the various cash advance lenders can be a nightmare. However, we’re all about empowering businesses like yours with premiere merchant cash advance services. For companies with fantastic sales projections, a merchant cash advance provides a friendly avenue toward success.

How Do Merchant Cash Advances Work?

 fixed set percentage based on future credit card sales is collected directly from the business merchant processor or a “lockbox” attached to the merchant processing every time the business “batches out” the credit card transactions until the payback (specified amount) obligation is met. The estimated time to repay is typically set to be 6 to 18 months depending on the risk of the file but could be longer as there are no limits to repayment period as the repayment is based on credit card transactions in the future and comes directly out of the business bank account.

This percentage repayment method flexible and works with you instead of against you. It’s attached to your future sales, making it perfect for most business owners who need a cash advance fast. The future payments fluctuate until the cash advance terms have been met, so the amount taken out depends on your company sales. This factor rate is typically around 1.10% to 1.50% percent. Give yourself some peace of mind and make your payment on your own terms. So, if you have slow sales, don’t worry. You don’t need to pay a fixed amount that day and instead can rest easy with your merchant cash advance knowing that it will deduct a fixed percentage. However, because this product does not have a fixed term as there is no certain time frame of repayment. this is not loans against credit card sales or a line of credit, but it is funding so the correct term would be merchant advance or cash advance business. Therefore, it is incorrect to use the phrase “Merchant Cash Advance Loan” or call a funder a lender.

Due to this unique repayment process, approval qualifications through AdvancePoint Capital are easier than traditional business loan financing.

To Qualify, Business Owners Must Have:

  • Acceptable amount of monthly credit card transactions
  • Open and active personal credit
  • Acceptable Business bank statements, although this type of business funding allows for lower average daily credit card balances in your business bank statements and also allows for some Overdrafts/NSFs in your statements.

Merchant Cash Advances Eligibility Requirements:

  • A simple one-page application
  • Merchant Processing Statements
  • Business Bank Statements showing consistent cash flow.
  • NO TAX RETURNS REQUIRED!
  • All credit types considered from excellent to poor
  • A minimum of 6 months in Business sales
  • NO START-UP BUSINESSES

Who Can Qualify for a Merchant Cash Advance?

A merchant cash advance is far easier to qualify for than a traditional bank business loan. Even though the terms for approval are more lenient, there are still restrictions on this type of cash advance. This type of advance is perfect for small business owners who heavily rely on credit card transactions or debit card sales for their sales deposits. This type of company is what lenders are looking for because this reduces their risk in the long and short-term.

Common businesses that utilize this business financing option are restaurants, auto service centers, dry cleaners, online e-commerce stores, and other retail stores that rely on credit card transactions or debit card sales. Seasonal businesses also use these types of financing options because they have fluctuating sales. This means that there are periods of heavy sales and other seasons of poor sales, so the merchant cash advance is perfect for them to pay back without concern of how to pay another big monthly bill.

The Benefits of Merchant Cash Advances (MCA):

  • All credit is reviewed, but Substandard, Mid-Prime to Bad Credit are all acceptable
  • Flexible repayment attached to future sales with no fixed repayment period
  • Approval can be given even if you have a low monthly or annual revenue.
  • No financial statements are required (Tax Returns, Balance Sheets, or Profit & Loss)
  • No personal collateral required.
  • Concerns about merchant account bank statement issues, such as low daily balances and/or Overdrafts or NSF’s, can still be approved.
  • Only a minimum of 6 months in business required
  • If you have the need for speed, this is the business funding for you. When you need money faster than the traditional process allows, Merchant Cash Advance gives you quick access. Funds available same day.
  • No personal collateral required

Documents Required for Approval: How to Apply

  • 1 Page Application including owner information
  • Business Bank Statements
  • Credit Card Merchant Processing Statements

Merchant Cash Advance

Eligibility Requirements: 

Application: A simple one-page application 

Paperwork: Provide most recent Merchant Processing Statements and/or Business Bank Statements showing consistent cash flow. NO TAX RETURNS REQUIRED!

Credit: All credit types considered from excellent to poor

Time in Business: In business for a minimum of 6 months.

NO START-UP BUSINESSES

The fast, convenient and straightforward way to get the money you need for your business – now! Get Your Quote Today by filling out our simple form.

What Is a Business Cash Advance?

How Does This Type of Advance Work?

Business Cash Advances(BCA), also known as a Purchase of Future Sales Agreements, advance a fixed lump sum of money with a discounted purchase price, also known as a specified amount, to payback. The advance is repaid by taking a fixed percentage based off of future overall total sales, which is different than a merchant cash advance, which takes a percentage of future credit card sales. Payments are collected by a fixed daily or weekly payment deducted from a business bank account, which is based on the fixed percentage of future total sales. 

Reconciliation of payments can occur after every month if the fixed payments taken are more than the set fixed future percentage of sales in the agreement. A refund back to the merchant can occur if an overpayment is made month to month while a payback balance exists. This repayment continues until the payback amount is paid back in full. Therefore, there is no fixed repayment period with advances as the fixed payback percentage is attached to future sales. This financial process mitigates credit risk by allowing the monthly collection of payments to be adjusted, unlike short term loans. This is not a loan or line of credit, but an advance or funding, so it is incorrect to use the phrase “Business Cash Advance Loans” or call a funder a lender.

Business underwriters estimated repayment period associated credit with expectations of being typically repaid in 6 to 18 months, but again, it may be longer or shorter depending on future credit card sales as the time period is not set in stone like a short term loan.

Product Overview

Business Cash Advance Rates: 1.10% up to 1.45% Factor Rates (This is not an interest rate)

Terms: No fixed repayment period. Repaid based on credit card sales.

Fees: Typically 1% to 3% Origination Fees

Payment: Fixed daily or weekly automatic clearing house (ACH) payments are weekly or per day Monday-Friday deducted from the account.

Credit Standards: All credit types from Bad Credit to Excellent is considered. Not FICO score is driven.

Required Documents: One-page Application, business bank statements

Learn More

Who Can Qualify for a Small Business Cash Advance?

BCAs, like merchant cash advances, are far easier to qualify for than traditional bank business loans. Even though it’s easier to get a business advance, there are still restrictions on this type of cash advance. This type of advance is another business financing option perfect for business owners who don’t rely on credit card or debit card sales for their sales deposits.

Common businesses that utilize this funding option are manufacturers, business professional services, wholesalers, distributors, restaurants, auto service centers, dry cleaners, online e-commerce stores, and other retail stores.

The Benefits of a Business Cash Advance:

  • Allows bad credit. All credit is considered but Substandard, Mid-Prime to Subprime Credit are all acceptable
  • Does not require a business credit
  • No personal collateral required.
  • Flexible repayment attached to future sales with no term limit
  • Approval can be given even if you have a low monthly or annual revenue.
  • No financial statements are required (Tax Returns, Balance Sheets, or Profit & Loss)
  • Concerns about business bank statement issues, such as low daily balances and/or Overdrafts or NSF’s, can still be approved.
  • Only a minimum of 6 months in business required. You don’t need to wait for 3 years in operation.
  • If you have the need for speed, this is the financing for you. When you need money faster than the traditional process allows, a BCA gives you quick access to receive funds in less than 24 hours.

Document Requirements for Approval: How to Apply

  • 1 Page Application including owner information
  • Business Bank  Account Statements
  • Credit Card Merchant Account Processing Statements (if credit cards are accepted as form of payment from customers, not required)

Most Common Uses and Needs of Proceeds From Cash Advances

  • Access Working Capital
  • Cash Flow shortages
  • New or Used Equipment
  • Expansion
  • Emergencies
  • Advertising or Marketing
  • Legal issues and licensing
  • New Projects

Learn More

Frequently Asked Questions (FAQ)

Are Merchant Cash Advances/Business Cash Advances a good idea for small business owners?

If a business does not qualify for more traditional business loan products, both MCAs and BCAs provide access to capital that otherwise would not be available to businesses, offering a way to leverage credit card transactions and pay daily or weekly through these purchases by taking out a fixed percentage. With a factor rate of around 1.10% up to 1.45%, it’s a sound option for those looking for capital fast.

Is a Merchant Cash Advance the same as Merchant Loans?

Cash Advances are not loans, but many people still call Merchant Cash Advances and Business Cash Advances loan,  MCA loans, BCA loan, credit card sales loans. Even though they are not business loans. there is no such thing as a merchant loan advance. MCA’s and BCA’s are a method of merchant financing. Merchant cash advance lenders are really a Business Funder and not Business Lender. The proper terminology for the provider of funds is funder, not a lender. Also, an advance does not charge interest, its considered factor cost or flat-rate financing. 

What happens if you default on a Merchant Cash Advance (MCA)? If I close and I no longer have sales, am I responsible for the remaining balance of a Merchant Cash Advance?

If you no longer have sales and your business is closed, you are not responsible for paying back any remaining balance of a business or merchant cash advance. If the business were ever to re-open and sales resume the business would be responsible to complete repayment. there is no owner personal guarantee, just a business performance guarantee. If there is some type of fraud detect than the funding company does have rights reserved to recoup capital funded.

Who are the best merchant cash advance companies or the best business cash advance companies? How to compare merchant cash advance.

Marketplace business finance providers provide the best options for both a merchant cash advance and BCA.

Can a small business get a Merchant or Business Cash Advance if it is a new company?

A new business must have at least 6 months of revenue to qualify.

Marketplace business providers, some online business lenders, and business loan brokers offer MCA. However, banks have tighter qualifications than online lenders and therefore do not offer Merchant Cash Advance or Business Cash Advance financing options. Marketplace loan providers, online business lenders, and business brokers have better approval rates with less stringent qualifications, but charge higher rates than traditional banks because they take on greater risks.

If you want to apply for a  Merchant Cash Advance, AdvancePoint Capital can help. We offer a wide variety of trusted resources and alternative funding options for small business owners throughout the country. We’ve helped countless business owners get the funding options they need with a variety of financing options, whether it’s through an MCA, BCA, Small Business Line of Credit, Small Business Loan, Long Term Business Loan, or various other business term loan.

Whether you’re worried about annual revenue, time in business, or credit history — AdvancePoint Capital can help. Merchant cash advances are a great way to receive cash flow fast, without needing to fuss around with banks or slow lenders. Furthermore, business loans are tough codes to crack without the right credit score. The system can be tedious and eventually devastating for small businesses that need cash advances quickly. With AdvancePoint Capital, you’re able to speed up the process with alternative finance resources, options, and processes — and learn all the information we provide you to make good decisions. We’re here to partner with you and help you navigate the challenging financial road map.

Choosing between the various cash advance lenders can be a nightmare, especially with factor rate options that may have wide ranges. However, we’re all about empowering businesses like yours with premiere merchant cash advance services. For companies with fantastic sales projections, a merchant cash advance provides a friendly avenue toward success. For small businesses looking for cash advances quick and with simple application processes — AdvancePoint has you covered. We’ve been a trusted finance marketplace provider for countless business owners. With no term loan limit cash advances that you can receive sometimes in as little as 24 hours regardless of your credit score — there’s simply no better method available.

Check out How to Find the Best Merchant Cash Advance provider to weigh all the benefits and evaluate the decision to get funding.

The fast, easy, convenient and straightforward way to apply, get approved, and receive the money you need for your business – now!

Get your Quote Today. Just fill out our simple form for free.

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* All loans made by either WebBank, an FDIC-insured Utah industrial bank, or Bank of the Internet Federal Bank, an FDIC-insured federally chartered thrift located in California. In connection with the loans, the Banks' underwriting conditions and terms apply.