An overview of merchant cash advances

what is a merchant cash advance

Not many business owners know what is a Merchant Cash Advance service. It is one of the business tools which every business owner keeps for using it to get the advance on the future revenues. So the business owner will need to have credit cards that will help in continuous payment flow in the Merchant account. It will help in relying on the future sales revenue which will come in the business. The business owners can easily apply for the Merchant Cash Advance and get it very quickly.

In this way, the business owners give a part of the future sales or revenues for the capital. The rate of the Merchant Cash Advance is higher than any other business loan. If a business has proper credit card payments then they can easily get providers who are available for providing merchant cash advances. The provider will take a certain percentage from the daily transaction that is made from the account of the business merchant. So whenever there is more transaction then it will indicate a faster repayment. So now the concept behind what is a merchant cash advance is clear.

 

Process behind it

The MCA provider and small business will agree on the terms of the advance, held back and payment amount. After agreeing to the terms, the business will keep a certain part of their future credit card sales. The held back is considered to be the predetermined percentage of the daily receivables which will be withheld for paying back the merchant cash advance. So held back revenue will continue until the entire advance gets paid. So the MCA provider will have complete access to the merchant’s business account. So the business transaction will determine the repayment of merchant cash advance.

Will it be beneficial?

Whenever a business needs funds quickly and if they have a good cash flow in the merchant account then they can easily get the high rates. So it is very beneficial for that business that is dealing with the transaction through credit card in the high volume. The entire process of what is a Merchant Cash Advance and its approvals will take 2 days. You will have to provide all the crucial information like tax ID, social security number along with your payment history and transactions on credit card. Once the application is approved the MCA provided will ask you to switch to credit card processors. So the business will get the approval of any kind of advance amount, but you should know when the payment will start. Now the merchant cash advances will get deposited into the bank account of the business and the automatically repayment will start from the merchant account.

merchant cash advances

Some alternatives

The MCA will not provide any kind of report of the money repayment or business transaction to any other credit bureaus so you won’t be getting any kind of rewards unlike those from another loan provider. So many businesses opt for the option of the online business loan. If you are looking forward to having a fund for the expansion project, better equipment, marketing endeavor or any other small business requirements then you can definitely consider the loan facility of online businesses.