How Do Merchant Cash Advance Really Work?

Small businesses that have poor credit sales obviously face a lot of difficulties in covering their business expenses. Not only that, their personal finances also being affected with the current struggles faced by their trade.

One way to save your small business from credit sales problems is to make use of a merchant cash advance. With this, you will be given the cash advance you need and repay it through the charges which the cash advance lender collects from your credit card account.

So how does a merchant cash advance really work?

Setting Up the Cash Advance

First, the small business owner has to set up the cash advance. There are now a number of MCA providers that you can go to if you are in need of capital and additional funds for your establishment. Our MCA Funding Company Cash Advance is one. If your establishment is already accepting credit card payments from your customers, you have a high chance in getting approved of the cash advance. If you don’t have one yet, the MCA provider will set it up for you. The cash advance lender will give you the amount of cash you need based on your regular revenue. After that, the lending company will take a percentage for every transaction completed via your credit card. That is how the cash advance is repaid slowly.

Repayment

The repayment process with the merchant cash advance is what makes it an attractive choice for funding small businesses. If you are approved of a cash advance, you do not need to make regular monthly payments as it is with a traditional bank loan. Instead, the cash advance lender will deduct the agreed percentage from your credit card every time you make a sale. The repayment percentage only ranges from 12 to 20 percent of each credit card transaction which obviously will not damage your profit in general. The repayment process ranges from six to twelve months. However, if you cannot pay within that period, the MCA providers will give you extensions.

Qualifications

It is a lot easier to qualify for a cash advance compared to a bank loan. With the MCA, you can get the funds you need even though you currently have a bad credit. With banks, there is almost no chance that you can get a loan if you do not have a good credit history. With the small business cash advance, all you will need is a year lease from your landlord, at least three months credit card transaction receipts, a monthly sales of at least $5,000 and your business has to be operating for more than six months.

When it comes to small businesses in need of emergency funding, a merchant cash advance is the most reliable option to choose. It helps small business owners to continue their establishment’s operation without too many risks on their part.