Merchant Cash Advances: A Quick Funding Solution for Your Capital Needs

Compared to traditional bank loans, the application process for an MCA is usually faster and more straightforward.

Funding can be completed within 24 hours and requires minimal documenation

Apply for a Merchant Cash Advance:

Common Questions about Merchant Cash Advances

What Is a Merchant Cash Advance (MCA)?

A Merchant Cash Advance (MCA) is a form of financing where a business receives a lump sum of cash upfront in exchange for a percentage of its daily credit card sales or future receivables. MCAs are typically used for short-term working capital needs. Repayment is made through a fixed daily or weekly deduction from the business's credit card sales or bank account until the agreed-upon amount, plus fees, is paid back.

How Does Repayment Work for a Merchant Cash Advance?

Repayment for an MCA is different from traditional loans. Instead of fixed monthly installments, MCAs are repaid through a portion of daily credit card sales or daily withdrawals from the business's bank account. The MCA provider calculates a "holdback" percentage, which is typically a fixed percentage of daily sales or revenue. This percentage is withheld until the MCA is fully repaid, including any associated fees. It means that on days with higher sales, the repayment amount is larger, and on slower days, it's smaller. The duration of repayment depends on the agreed-upon terms.

What Are the Pros and Cons of Merchant Cash Advances?

Pros:

• Quick Access to Capital: MCAs offer rapid approval and funding, making them suitable for businesses in need of immediate cash.

• No Collateral: MCAs are unsecured, meaning you don't need to put up collateral.

• Flexible Repayment: Repayment is tied to daily sales, making it more manageable during slow periods.

• Poor Credit Acceptance: Some MCA providers are willing to work with businesses with lower credit scores.

Cons:

• High Costs: MCAs can be expensive, with fees often expressed as factor rates, resulting in a high effective APR.

• Daily Repayments: Daily deductions can impact cash flow, especially if sales fluctuate.

• Not Regulated Like Loans: MCAs are not subject to the same regulations as loans, leading to potential transparency issues.

• Can Be Habit-Forming: Frequent use of MCAs can lead to a cycle of debt if not managed carefully.