Merchant Cash Advance 101

Every entrepreneur or businessperson knows that it takes money to earn money. Every business-minded people like you and me also know that it’s very frustrating to look for business funding especially when you have an excellent business idea but don’t want to turn to the banks for a loan.

Let’s face it. When someone goes to the bank to borrow money, banks typically have a long list of requirements to get an approval. You also have to at least know a little bit of industry jargons like CBR, DTI, LTV, STIP and many other terms and acronyms. On top of that, you have to convince your loan originator or loan officer that your business idea will work.

The good thing is that there alternative sources of financing for small to medium-sized businesses. The most popular is merchant cash advance (MCA), otherwise known as credit card factoring. One of the advantages of a merchant cash advance is that unlike banks, MCA providers don’t typically care how you spend the money. The only thing that matter of course is whether the borrower will be able to pay back the provider. The borrower has the flexibility of spending the money in any way, be it refinancing the existing business, remodeling an office, upgrading tools and equipments, as an addition to the working capital, marketing, payroll, and the list goes on.

So how does merchant cash advance work? The merchant cash advance provider purchases credit card receivables from the borrower. That is, the provider advances money on the borrower’s future credit card receipts.  In essence, merchant cash advance is not treated as a loan to the client receiving the money. Rather than borrowing money, the merchant is selling an interest in his or her future credit card receivables. As long as the merchant’s credit card receipts does not fall below 50 transactions a month, has a minimum of $5,000 in credit card sales, has owned the business for the past 12 months and must not have any open bankruptcies or foreclosures, then the merchant is eligible for a cash advance. Repayment of the cash advance is done from credit card receipts. There is no due date and no fixed payment, meaning when sales are down, the payment rate is also low and when the months are up, payment rate also goes up if the merchant can afford it.

Established cash advance provider such as Our MCA Funding Company Merchant Solutions can help your business if you interested in securing a merchant cash advance. Call this toll-free number, or visit the website at www.entrustcashadvance.com for further details.