For business owners, a merchant cash advance, or MCA, can mean the difference between getting the supplies you need for your next big project or turning down opportunities for growth. These advances can help your company gear up for growth or weather a dry season and can be an excellent source of short-term funding when needed.
What Is It?
One of the biggest benefits of getting an MCA is that it is not a loan. This means that instead of relying on your company’s credit history, it relies on the amount of credit card sales deposited in your account during a given time frame. This means that it can be easier for smaller or newer businesses to get. Since this is a short-term financing solution, it also means that you may be paying higher rates, so it is important to do some research before applying.
What Does it Cost?
When you get a merchant cash advance, you will be paying the advance back and the interest, with a holdback. This holdback is the percentage, usually between ten and twenty, of your daily credit card sales which are applied to the advance. It is usually automatically deducted from your account, allowing you to effortlessly pay back the amount through making sales and not cutting checks. The percentage is usually fixed over the term of the advance, so the more credit card transactions you have in a day, the faster you can pay it back.
How Do You Get One?
To get an MCA, you will be working with a specialty company which provides the service. These providers will need you to fill out an application and send in records of your past credit card sales to evaluate their risk and how much of an advance they can offer you. It is important to compare providers and read the fine print to make sure that you are getting the right terms for your business. It is a good idea to have a detailed and concrete plan for how you are going to use the money before you apply so you know how much you need.
A merchant cash advance can help you get the funding you need to grow your business, pay bills or weather seasonal dry spells. You can get these advances from reputable providers and pay them back with interest out of your daily credit card sales. This holdback is usually automatically withdrawn from your accounts, so you do not have to worry about paying a bill each day for the term of the advance.
