What is a Merchant Cash Advance?

A Merchant Cash Advance is an upfront Advance which is paid back from a percentage of your daily credit card sales.

Who is a merchant cash advance good for?

  • Someone who can’t qualify or have been turned down by the banks.
  • Someone who needs money fast and cannot wait 3-6 months to possibly get a bank loan.
  • Someone who does not have great business or personal credit.
  • Someone who does not want to incur debt.
  • Someone who does at least 5k in credit card sales per month.
  • Someone who needs additional working capital.
  • Someone who needs money to take advantage of a growth opportunity.
  • Someone who needs money very fast for an emergency expense.

What are MCAs used for:

  • Expansion of Location
  • Payroll
  • Inventory
  • Business Improvements
  • Marketing Campaigns
  • Purchasing new Equipment
  • Emergency Cash Needed
  • Seasonal Business
  • Repairs
  • Pay off existing Debts
  • Pay Rent

MCA vs Bank Loan

MCA:

  • Funded in 5 days or less.
  • Fast and easy loan application process.
  • Easy to qualify for fund based on a company’s credit card revenue.
  • Do not need to put up collateral.
  • Do not have to personally guarantee the advance.
  • Pay back is flexible. When you make more, you repay more. When you make less, you pay less.
  • Your credit score is not important.
  • The money can be used in any purpose.

Bank Loan:

  • Takes few weeks, even a few months to get the funding.
  • Need bank statements, business plan, great credit, profit and loss statements, experience.
  • Most business owners seeking a bank loan are turned down. Less than 20% are approved.
  • You must put up collateral.
  • You personally guarantee the loan.
  • Bank payback is rigid. It is a fixed amount, no matter how the business is doing.
  • You need great personal and business credit.
  • The bank needs to know exactly what the loan would be used for.

Types of businesses that MCAS are good for:

  • Restaurants
  • Bars
  • Motels
  • Hair Salons
  • Barber shops
  • Gas Stations

How does an MCA work?Case Study

Amount of Advance = 50K
Factor Rate = 1.15%

1. Loan or Advance Amount x Factor Rate
50,00 x 1.15% = 57,500

2. Daily Credit Card Sales = 2000
Holdback Rate = 10% of Daily Credit Card Sales

2000 x 10% = 200
200 will be paid back to the MCA lender untill the 57500 is paid back in full.

***** The repayment typically ranges from 3 to 18 months. The higher your credit sales, the faster you repay the merchant cash advance.
You pay less in slow days and more in bad days.

Split Withholding – The payments are paid daily and processed by you credit card processor. In this example 10% goes to the lender.

When banks say no we say yes.