Merchant Cash Advance Guide for Small Businesses
When speed is your number one priority, a merchant cash advance (MCA) could be a lifesaver. Many small business owners finance their business with merchant cash advances when time is short and money is shorter. Since MCAs aren’t technically loans, they don’t require the same strict eligibility standards that loans do-so you can score capital with low credit and zero collateral in no time.
What is a merchant cash advance?
A merchant cash advance empowers your business to trade tomorrow’s earnings for cash today. You receive a lump sum of cash upfront, and then you pay back the advance with a percentage of your daily sales. You’re essentially selling your future sales at a discount.
When time is money, it’s sometimes worth it to swap value for speed. You can use a merchant cash advance on pretty much any business expense: seasonal costs, business expansion, equipment repairs, cash flow gaps-you name it!
New businesses and those struggling with their credit score love MCAs for their lenient approval criteria and blistering-fast speed. You can receive cash advances for anywhere from $5k to $400k, making them versatile financing options.
Yes, it’s debt, but the structure of a merchant cash advance offers a bit of protection for your business: since your payments are dependent on your daily sales volume when sales slow down, your payments do, too.