The 2008 credit crisis underscored just how important timely access to capital can be for small business merchant to keep the lights on. Merchant cash advance (MCA) represents an important resource in maintaining a business’ cash flows. Merchant Cash Advances offer small business working capital on the strength of their future credit card receipts. The lcash advances essentially enable merchants to take their business to the next level, leveraging their present success in order to finance future growth.

Anatomy of a Merchant Cash Advance

Merchant cash advances  help streamline the small business loan process, eliminating much of the hassle associated with conventional smal business loan applications. Commercial loans typically involve a longer application cycle, higher approval standards, and smaller sums than MCAs. Merchant cash advances, by contrast, offer quick infusion of businss funding.

Application Process. Some providers boast a 24-hour turnaround of applications, and make funds available within seven business days. Many offer online applications. Unlike many conventional loans, Merchant Cash Advance applications do not involve upfront costs such as processing or closing fees.

Funding Amounts. Funds range from $2,500 to $500,000, depending on the cash advance lender, the applicant’s business history and its average monthly credit card sales volume.

Eligibility. Merchant Cash Advance lenders assess applicants on two simple criteria -  average monthly credit card sales volume and years in business. A typical benchmark for approval is $5000 in monthly credit card sales volume and at least 1 year in business.

Repayment. The hallmark of merchant cash advances is the hassle-free repayment method. The merchant cash advance companies automatically deduct a percentage of credit card sales receipts. Since the repayment amount is based on monthly credit card sales, it varies based on the small business’ performance. The more successful the business, the higher the payment; when business is tight, the payment amount drops.

Advantages of Merchant Cash Advance

Merchant cash advance companies are able to streamline merchant funding because they are not technically loans. Though the effect is the same–a store or restaurant receives cash infusion –the terms are different. A Merchant Cash Advance company essentially purchases a share of future credit card receivables. The status of this exchange as a purchase rather than a small business loan offers several important advantages:

1. No collateral is required. Cash Advance for small business is not linked to an applicant’s personal credit. Also, as with unsecured business loans, they do not require collateral.
2. Hassle-free application. The business cash advance application process does not require the auditing typical of conventional loans for business, so tax returns and asset documentation are not required.
3. Flexible merchant funding. Small Business Cash Advances come with no stipulations about how the funds should be applied.

A business cash advance offers a flexible alternative to conventional loans for business. By purchasing receivables rather than loaning businesses cash outright, merchant cash advance companies simplify the process. Merchants enjoy a simple application process with fast turnaround. Within a week, applicants have access to the business funding they need. Better yet, repayment is hassle-free. By collecting a percentage of the credit card receivables, merchant cash advance companies position themselves as true partners in their client’s success.

Tags: Business Cash Advance

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