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When to Consider a Merchant Cash Advance?

If you are running a business, you must be well aware of the fact that you can run out of cash at any point of time. Businesses can opt for business loan. However, in order to get approved, it takes some time. However, if businesses need some urgent capital, they can go for other financing option like merchant cash advance (MCA) or business cash advance.

business cash advance

Merchant Cash Advance

MCA can be considered as a kind of an advance that is given against the future credit card sales receivable.

business cash advance

MCA – Best Solution

A business might need some extra cash in order to purchase some things for their inventory. Insufficient fund can cause disturbance within the business operation. And when a business is not able to operate smoothly, pressure starts to mount up.

Taking up business loan is ideal but it comes with a lot of obligations, such as submitting collateral. However, a business cash advance, also known as MCA doesn’t require any such terms. Moreover, the loan gets approved and money gets transferred quickly.

business cash advance

How the Merchant Cash Advance Works?

With numerous businesses opting for MCA, it is very crucial to know how the merchant cash advance works. Once one is able to understand MCA, one can come to know if it would be suitable for their business.

business cash advance

When a business opts for MCA, they receive a lump sum of money ranging from $2500 to $250,000 of capital. The business cash advance amount gets transferred within few hours to days. The amount is provided by the online financing companies. Although the process might seem to be a simple one, it is not like that. The catch comes with the repayment issue.

The borrower needs to sign an agreement with the merchant cash provider. The provider checks out whether the borrower is having a good credit card sales history or not. However, MCA is one of the expensive financing options available in the market.

business cash advance

Although, the application process for the business cash advance is very simple; it comes with certain terms and conditions. For instance, businesses need to pay a certain percentage of their future credit card sales to the MCA provider. As soon as one starts to get the money, the business needs to repay the amount. Even though the time period is not fixed; still, the percentage of the daily credit card transaction that needs to be paid is fixed.

Advantage and Disadvantage:

The biggest advantages of MCA are:

  • Easy approval process and don’t need a lot of paperwork.

  • Credit score doesn’t bother the MCA providers very much.

  • Business cash advance don’t require year of proven profitability in order to qualify for the loan.

The disadvantage of MCA is that business would be paying the amount of their credit card sales on daily basis. Hence, cash flow will be interrupted. The amount might vary day to day as it will depend on the amount of money earned. Lastly, the whole amount is paid back, the withholding rate remains same.

Businesses should go for MCA if they don’t have any other financing options. They should only go for this loan if they can survive with limited cash flow during the repayment period.

Merchant Lenders & Advances in Canada

Small businesses that are looking forward to expanding their business would need some form of working capital. Businesses in need of some working capital can opt for a business loan. However, the loan to get approved can take a lot of time. In case, a business can’t wait for a long time then they can opt for merchant cash advance.

merchant cash advance loans


Usually, merchant cash advance loans can provide Merchant Cash Advance (MCA) to their customers. MCA is considered to be an alternative financing option for businesses.  MCA can help a business to get some finance very quickly. As a matter of fact, it can be said that MCA can be great for businesses that are looking for quick finances along with flexible payment option.


Merchant Cash Advance

If you are hearing the term MCA for the first time, you don’t need to freak out. This blog will guide you completely with the terms of MCA and what it is all about.

MCA or popularly known as Merchant Cash Advance is an advance and not a loan. Even if it’s referred as a loan, it is an advance that is given to a business against their future income. Or, better be said, the advance is given against the future credit card sales receivables. The advance is given by merchant cash advance loans only after making an agreement. Before making the agreement, the lender sees to it whether the business would be able to repay the entire amount of advances.

merchant cash advance loans

Who Are Merchant Cash Lenders?

Now one question might strike your mind, i.e. who are merchant cash lenders? Basically, merchant cash lender is the provider who provides the finance to the client. The lender can be an individual or a private group, who makes the finance available for their customers. The merchant cash provider provides the advance or the finance with the expectation that the advance amount would be repaid by the customers along with a certain percentage of the income.

According to merchant cash advance loans, the merchant cash advance providers don’t ask for any form of collateral for giving the finance. They don’t need any form of security. It’s because the lenders usually form a partnership with payment processors. After that, they seek a certain amount of the future credit card sales of the client.

merchant cash advance loans

What Does Advancement Mean in MCA?

By this time, you must be well aware of the fact that MCA is an advance and not any form of a loan. Hence, the term advance for MCA means a certain amount of money that is given to a borrower. Unlike loans, advances don’t come with a maturity date.

According to merchant cash advance loans, the advances can be a great line of credit for small businesses. It allows businesses to withdraw cash and meet their business goals or make necessary improvements.

Merchant cash advance loans provide more weight to the performance of the business instead of the credit score of the applicant or business owner. If they see that the applicant is making a good profit, they can give a high amount of advance. As they know they will get their money back with the passage of time. Hence, MCA is better than the traditional business loan.

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