Merchant cash advance
Merchant Cash Advance Benefits for a Business
Cash flow is everything and critical to growing an enterprise, paying a supplier and even maintaining inventories. Hard economic times have had their effect on lending markets and most small and medium sized investments have no choice but look for cash elsewhere. Merchant Cash Advance (MCA) is the newest solution for business owners.
Through merchant cash advances, entrepreneurs are given another business funding source, especially those without collateral or credit rating capable of securing a loan from a traditional lender such as a bank. In contrast with a bank loan, MCAs provide a business with a fixed and upfront cash amount. The funds provided are essentially a future purchase of credit card sales of a business usually at a discount. After the agreement has been signed, a business gets money in a lump sum while the merchant cash advance gives the funds provider the chance to retrieve a specific amount of the credit card sales of the business on a monthly basis.
Merchant cash benefits to a business
There are a number of reasons why MCAs are great alternatives to traditional loans for business.
Collateral and credit rating not a concern
If a business is searching for one of the safest sources of cash, MCAs will suffice. They are not affected by credit rating as happens to commercial loans; they are a transaction of sales and cannot appear on a credit report. If you benefit from an MCA, you will not mind a lot about losing your collateral because none is required, a major concern for those who have taken loans from banks.
Collection and application is simple and quick
The process of applying for MCAs is painless, simple and clear from the beginning to the end. The lenders look into business plans, tax returns and financial statements. Only the period of time the business has been running and the returns on credit cards every month are considered. The service is fast and you can receive the cash you need in less than 72 hours. While commercial loans usually take months or weeks to be processed, MCAs can be less than three days or a week at most.
Through an MCA, you will be cutting out middlemen from your finances by working one-on-one with the financier.
Since it is business performance that determines the merchant cash advance as compared to credit, evaluating an applicant takes a short time and the approval rate is quite high. Such a practical approach gives stable small and medium-sized enterprises the chance to access advances fast. In most cases, advance amounts are dependent on the previous year’s average monthly revenue.
Collections are based on revenue
A merchant cash advance provider only gets paid once your business has been paid. A traditional loan is offered at a fixed amount paid on a monthly basis while the amount collected under MCA fluctuates depending on the sales volume of a business. In dire times, the merchant cash advance is affected while during good business months the MCA gets a better monthly sum than average. Such a collection policy based on percentage ensures that MCAs support the success of a business as compared to takings its funds even when it is not performing well.
If your business requires a rapid infusion of cash safely, Merchant Business Funding’s MCA is a very attractive facility to check out. The MCA lender will take a small part of the returns ensuring a business is able to avoid a default on payment in case its sales go down for whatever reason.