What is a Merchant Cash Advance?

A merchant cash advance is a type of revenue based financing that allows businesses to borrow capital and repay the loan with the revenue they earn on a daily basis. This is more flexible than a traditional loan because the merchant financing company will take a percentage of the daily revenue through credit/debit card transactions.

Is a Merchant Cash Advance Right for Your Business?

Businesses that sell a product benefit from merchant cash advances by reaping the immediate rewards of processing credit and debit card transactions and funding your loan up front. 

However, businesses that do not sell products or process credit/debit transactions may not see the benefit of a MCA.

How merchant cash advances work

Merchant cash advances are loans funded upfront for businesses to improve their cash flow, acquire inventory, and continue to grow and build their business. 

The merchant cash advances are repaid through a percentage of the debit/credit transactions businesses receive for selling their product. The MCA lender will automatically deduct a percent of the total revenue for each day’s sales.

Benefits of a merchant cash advance

The benefits of merchant cash advances are quick access to funds, credit/debit processing services,  personal collateral is not necessary, and repayment based on sales instead of a fixed monthly payment.

Who can apply for merchant cash advance

eCommerce businesses that are interested in a merchant cash advance must meet certain qualifications to apply. Each lender is a little different, but generally here are the main qualifications: 

• Provide a minimum dollar amount of credit/ debit transactions per month for at least one year of business.
• Meet a minimum annual revenue
• Meet a minimum credit score (this is optional for some companies, others do not require a credit score)
• Any forecasts or projected income