What is a Merchant Cash Advance?

A merchant cash advance is a type of funding that allows businesses to borrow money based on future sales. The funds can be used for any business purpose, and the repayments are made through a portion of the business’s daily credit card sales. Merchant cash advances are a flexible and fast way to get funding, but they typically have high interest rates and fees. Merchant cash advances can be used for any business purpose, such as:

Purchasing furniture, fixtures and equipment (FF&E)

Buying inventory to sell to customers on credit

Start-up costs (such as licensing and permits)

A merchant cash advance is a type of funding that gives business owners access to capital based on their future credit card sales. This type of funding can be a great option for businesses that don't qualify for traditional loans, or need money quickly. Merchant cash advances are usually paid back through a percentage of your daily credit card sales, so there's no set repayment schedule. This can be helpful if your business has fluctuating sales or needs more flexibility when it comes to repayment.

How does a merchant cash advance work?

A merchant will sell a portion of their future credit card sales at a discount to an investor in exchange for immediate cash. The repayment amount is based on a percentage of the business's daily credit card sales, so it fluctuates with sales volume. This makes it a good option for businesses that have irregular or seasonal sales.

One advantage of merchant cash advances is that they're easy to qualify for and there's no collateral required. They're also quick to obtain - you can usually get the funds within a week. The downside is that they typically have high interest rates, so you need to be sure you can repay the loan before taking one out.

What are the benefits of a merchant cash advance?
There are several benefits of a merchant cash advance, including:

-Access to quick capital: One of the biggest advantages of a merchant cash advance is that it provides businesses with access to quick capital. This can be helpful for businesses that have unexpected expenses or need to make a large purchase.

-Flexible repayment terms: Another benefit of a merchant cash advance is that it offers flexible repayment terms. Businesses can choose how much they want to repay each day or week, based on their sales. This can be helpful for businesses with fluctuating sales or seasonal business cycles.

What are the drawbacks of a merchant cash advance?
A merchant cash advance (MCA) is a popular financing option for small businesses, but it’s not without its drawbacks. First and foremost, MCA loans are expensive. The average APR on an MCA loan is 30%, which is well above the rates offered by traditional lenders such as banks.

Another downside of MCA loans is that they are often structured as “balloon payments.” This means that the borrower will be required to repay the entire loan amount in one lump sum at the end of the loan term. This can be a problem for small businesses that may not have the cash flow to make such a large payment.

Lastly, MCA loans are typically short-term financing options, with terms lasting only a few months. This can be problematic for businesses that need longer-term financing to support their growth.

Who is eligible for a merchant cash advance?

To be eligible for a merchant cash advance, businesses must have been in operation for at least six months and must have consistent revenue. In addition, businesses must have a credit card processor in place in order to qualify.

For businesses that meet these criteria, a merchant cash advance can be a fast and easy way to get the capital they need. Approval typically takes just a few days and funds can be deposited into your account as soon as the next business day.

How do I apply for a merchant cash advance?

To apply for a merchant cash advance, you will need to provide some basic information about your business, including your annual sales volume and average credit card sales. You will also need to have a good credit history and a strong financial statement. Once you have submitted your application, the lender will review your information and make a decision about whether or not to approve your loan.

You can always apply with Masoba Capital and we will get you your needed funds.  Apply Today!