Merchant-cash-advance

Merchant-cash-advance2018-06-22T20:11:16+00:00

What is a Merchant Cash Advance?

With a merchant cash advance, a financing company advances you capital in exchange for a percentage of your daily credit card sales, plus a fee. Merchant cash advances can be quick, easy ways to get a business cash advance with no need for collateral—even if you don’t have a great credit score.

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Who Qualifies for Merchant Cash Advances?

Would your business be eligible for a merchant cash advance?

If you have little or no collateral, limited business history, or a low credit rating, merchant cash advances could be a solution to your financing problems.

Merchant cash advance providers tend to have easy eligibility standards, so most small businesses shouldn’t have a problem qualifying.

Plus…

For businesses that make a big portion of their revenue through credit card payments—if you own a restaurant or a retail store, for example—then you can use a merchant cash advance as a short-term financing tool. It can help with working capital, inventory purchases, debt payments, unexpected payments, and more.

  • Quick access to funds
  • Easy approval process
  • Bad credit is accepted
  • Suitable for a wide range of business purposes
  • Higher fees than with traditional loans
  • Less flexibility to change merchant service providers
  • Daily deduction of credit card receipts reduces cash flow

Who Qualifies for Merchant Cash Advances?

Would your business be eligible for a merchant cash advance?

If you have little or no collateral, limited business history, or a low credit rating, merchant cash advances could be a solution to your financing problems.

Merchant cash advance providers tend to have easy eligibility standards, so most small businesses shouldn’t have a problem qualifying.

Plus…

For businesses that make a big portion of their revenue through credit card payments—if you own a restaurant or a retail store, for example—then you can use a merchant cash advance as a short-term financing tool. It can help with working capital, inventory purchases, debt payments, unexpected payments, and more.

Apply Now

How to Apply?

Applying to a merchant cash advance is a fast and easy process. Because merchant cash advances are paid back with your daily credit card sales, MCA companies will look at your credit card processing statements to make sure you have enough volume coming into the business. Some merchant cash advance companies will ask for your credit score and bank statements, too.

Merchant cash advance applications are almost always online, and applications can be approved the same day you apply. Remember: fast cash is expensive cash, and an MCA is no exception. A merchant cash advance application is fast and easy, but MCAs come with the highest cost of capital on the market.

Documents you need:
  • Driver’s License
  • Voided Business Check
  • Bank Statements
  • Credit Score
  • Business Tax Return
  • Credit Card Processing Statements

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How Does a Merchant Cash Advance Work?

Every business could use some extra capital. But applying for loans takes time and energy that you might not have.

Plus, even after you send out an application, there’s a chance you don’t even qualify.

At Moneybee Funding, we pride ourselves on having a marketplace that can help out all different sorts of business owners. If you don’t have the time to wait for a typical loan or wouldn’t qualify, a merchant cash advance might be for you.

How would you like a cash advance—approved and funded in just a day or two—with almost no paperwork involved?

That’s what a merchant cash advance is, with one caveat:

In return for that lump sum advance, you agree to pay the lender back with a percentage of your daily credit card sales.

While a merchant cash advance is definitely one of the faster financing options out there, it is the most expensive loan on the market.

How Long Will It Take To Pay Off a Merchant Cash Advance?
The average repayment time frame for a merchant cash advance is 8 or 9 months.

But the term can be as short as 4 months and as long as 18, depending on your business.

And the higher the fixed percentage of your credit card sales you’re paying the lender with, the shorter your repayment time—and the tighter your cash flow.

How do you know whether a merchant cash advance will make sense?

On the one hand, paying off a loan with daily credit card sales can bite into your cash flow more than you might expect.

On the other, you’ll actually repay a smaller amount of money during slower weeks and months—unlike with a term loan, where you’ll either make your payments on time or suffer the late fees.

In the end?

It’s up to you to understand your business’s financials. Just remember that a merchant cash advance is the most expensive financing option you could pick.

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What Will a Merchant Cash Advance Cost?

We’ve said it over and over: A merchant cash advance can be very expensive. And based on the structure, taking on an MCA can really take a chunk out of your cash flow.

But let’s look at how you can calculate the actual cost of a merchant cash advance.

Say you’re advanced $20K with a factor rate of 1.18.

$20K multiplied by 1.18 is $23,600, which is what you’ll need repay with your daily credit card transactions.

At first glance, that might seem like you’re just paying a 18% interest rate—but looks can be deceiving.

You have to determine the true cost of the merchant cash advance by its APR.

If your lender will be taking 15% of your future credit card sales and you’re estimating $25K a month in credit card transactions, you’d repay that advance in 189 days with daily payments of $125.

That’s an APR of 65.96%—quite a bit higher than it originally looked.

Merchant cash advances, while fast and convenient, tend to be worth their price only if you’re confident you can repay them quickly and without much harm done to your cash flow.

Just be sure to shop around and see if you can qualify for other types of loans before moving forward with a merchant cash advance.

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