MERCHANT CASH ADVANCE
A merchant cash advance (MCA) could save your life if quickness is your top goal. When time and money are limited, many small business owners use merchant cash advances to support their operations. Since MCAs aren't considered loans, they don't have to adhere to the same severe eligibility requirements that loans do. As a result, you can quickly obtain capital with bad credit and no collateral.
What is a merchant cash advance?
Your company can use a merchant cash advance to exchange tomorrow's profits for cash today. A lump sum of money is given to you up front, and you repay the advance with a portion of your daily sales. In essence, you are selling the discounted future sales.
Sometimes it makes sense to trade off value for speed when time is money.
MCAs are preferred by start-up companies and those with poor credit because of their quick processing times and lenient approval standards. Cash advances are flexible financing choices because you can get them for amounts ranging from $5 to $400,000.
Although a merchant cash advance is debt, the way it is structured gives your company some protection. Since your payments are based on your daily sales volume, when those sales decline, so do your payments.
Fast application, processing, and funding
The key to MCAs is speed. Everything is accomplished in a flash, from application to money in your account. Funds can be in your account in less than three days after approval, which can happen in as little as 24 hours. Alternative lenders can speed up the underwriting process since they are not subject to the same stringent rules (decreasing prices for them and hopefully for you, too).
Your credit score is less important to MCA providers than your credit card processing statements. After all, this gives you a better idea of how much you'll have to pay back every day. This makes it possible for startups, entrepreneurs, and those who have credit score problems to get small business finance.
However, if you have high sales along with an excellent credit score, your factor rate will be lower. By doing this, you can significantly reduce the overall cost of your merchant cash advance.
Flexible payment schedule
Your payment timeline is flexible due to the MCA's related payback structure. You can relax knowing that your MCA only needs minimum payments if you're experiencing a seasonal downturn or a few challenging weeks.
Unlike a short-term loan or credit card payment, other loans, such as mortgages, do not offer the same flexibility. Your payments are payable in those circumstances regardless of your existing sales level.
High borrowing limits
You have a wide range of spending ability with MCAs thanks to loans ranging from $5k to $400k. Your sales will determine how much money lenders will loan you.
No collateral required
MCAs are unsecured loans, so you won't have to risk your home, car, or personal resources.
Adaptable to any business use case
Your merchant cash advance funds can be used for almost any type of business expense. They work well when financing current operating expenses (like restocking inventory or making payroll). But it doesn't mean you can't modify them for additional use cases. The quickness of an MCA also enables you to use it for urgent costs like equipment repairs, cash flow problems, and more.