Are you a small business or a start-up with a need for a more steady cash flow? Don’t fret: you are not alone. Solutions abound. One excellent solution is to look into obtaining a merchant cash advance. They can function as an incredible financial lifeline for many emerging businesses. Let’s take a look at them:
Merchant Cash Advances (MCA’s)
MCA’s are cash advances obtained from a financing agency against future credit card sales. MCA’s are typically used by businesses that have a steady volume of credit card sales, including retail outlets, restaurants and bars, and other commercial establishments. Businesses receive an up-front lump-sum payment from the financing agent and then pay it back as they make sales to customers.
Once approved, you’ll receive an infusion of capital in as little as 3 days. The payoff is accomplished by transferring a portion of daily credit card sales, referred to as the “holdback rate”, to the financing agent. The cost of obtaining this money is a function of the “factor rate”, generally 1.1 to 1.5%, which is dependent on your firm’s credit and financial strength. In most cases, the payoff is achieved within 18 months, sometimes a lot less.
Benefits of Financing With MCA’s
Merchant cash advances can be an ideal way for many start-ups and established small businesses to maintain the working capital they need to conduct operations and grow. Here are some of the most popular advantages of MCA’s:
The application process is fast, efficient and non-invasive
Your credit score is not the most important factor for approval
Your payback terms are flexible and friendly
You will never need to put up any collateral
Use the funds any way you see fit.
MCA’s are not fit for every funding situation, but for many, they can be quite appealing.