What is a merchant cash advance?

As a suitable alternative to the lengthy process of approval and strict credit requirements for a traditional term for business loans cash advance, a merchant cash advance (MCA) is very useful for generating money. It is based on the months of credit card sales of a business although it is not technically a loan.


As a business owner, you are the recipient of credit cards payments or other sources, including the receivables amount to obtain the advanced funds regularly flowing through the business MCA. As soon as MCA for small business application is approved, you will see how quickly advanced deposits appear in your account.

cash advance

Merchant cash advance is not a bank

Merchant cash advance providers are not banks as its main considerations are only the daily receipts of a credit card to determine if the business can settle the advance on time.

Portions of future credit card are sold by small business owners to acquire their capital as soon as possible. Rates from Merchant Cash Advance are often higher compared with other smaller options for business loans.

Even if a business does not qualify for the usual fast business loan, it can still be approved by the merchant cash advance provider due to the consistent and steady flow of personal credit card payments. Business owners choosing this option should understand thoroughly the offered terms to make an informed decision about potential lump sum from ROI.

How merchant cash advance works

The small business and Merchant Cash Advance provider agree on the advance amount, payback and percentage of the hold back. After the agreement, the advance payment is transferred to the bank account of the small business as an exchange for future percentage from receivables or credit card receipts.

A daily percentage of revenues or credit card receipts withheld has been agreed to pay back to the merchant cash advance. Called a “hold-back”, it will continue until the merchant cash advance is paid fully. No collateral is required as a lender has to access to a business owner’s merchant account.

Repaying the merchant cash advance

Borrowers who use a merchant cash advance pay back around 20%-40% (or more) of the amount borrowed. Frequently displayed the percentage of the factor rate is equivalent to be 1.20 – 1.40.

The holdback percentage is typically based on 3 factors:

  • How much is received by the business
  • How long is needed to repay the advance
  • What are the bi-monthly receivables

Determine if Merchant Cash Advance is right for your business

Analyze your business and consider MCA as an option when your business needs to access capital quickly.

What are the benefits of merchant cash advance?

It accepts applicants with bad credit

Unlike other lenders who do not consider creditors with bad debts. Those with bad credit are still accepted, even if their monthly credit card sales are below $500.

The approval rate is high for Merchant cash advance

So small business loans are approved. It does not require strict credit requirements, complicated contracts, or extensive documentation. Since merchant cash advance is not based on personal credit card transaction, time in business or financials, the approval rate is high.

No credit or collateral is at stake with a merchant cash advance

MCA is not considered a loan as it is a sales transaction. Because they are sales transactions, MCA does not require collateral and is not included in credit reports.

The application process is easy

A commercial loan can take weeks or even months to be processed. On the other hand, MCA can be available within the same week that the application is processed.

Payback is simple and hassle-free

The application process for a merchant cash advance is not only simple and hassle-free, so is the collection process. A merchant cash advance payback is revenue-based. It follows that when you have lots of monthly activities, your payback amount is more, and when your month is slow, the payback amount will be less. This percentage-based collection policy allows a business to grow.

Choosing a Merchant Cash Provider

There are now lots of merchant cash providers so you have to choose the right one.
Consider these:

  • Length of business experience;
  • Right training method;
  • Provision of customer service;
  • Ability to use technological mediums and online response time;
  • Deposit process and duration

The Application Process for a merchant cash advance

It’s very fast to get a merchant cash advance approval. Soon after approval, the business could see the funds appearing in their account within days.

Follow these steps:

  • Step 1 – Apply for the advance: The application is typically one or two pages long and will require your SSS, business tax ID, and other business information.
  • Step 2 – Provide documentation: Present several months of credit cards or payment processing data as well as bank statements.
  • Step 3 – Get approval: It could be as fast as 24 hours for your business to be approved for a merchant cash advance.
  • Step 4 – Set up the credit card processing: This type of funding may require the business to switch to a new credit card processor.
  • Step 5 – Finalize details: Make sure you understand when payments will start, because it may be as fast as the next business day.
  • Step 6 – Receive the funds: The amount coming in as the Merchant Cash Advance will be kept in the bank account of your business and you will begin payment via the merchant account automatically.

Considering the multiple benefits of merchant cash advance, it could be your best option to increase capital flow and build a stronger business staunch. So you do not need to approach traditional lenders and do lots of paperwork. Opt for a Merchant Cash Advance to have funds quickly deposited into your account.


Merchant cash advance- Most asked questions!

There are still some questions that are most likely asked by individuals who still can’t decide as to whether or not they should consider merchant cash advances as one of the best alternative in sustaining a business, especially whenever there are backlogs in your business.

Here are the most asked merchant cash advances questions:

1. Is merchant cash advance legal?

  • A merchant cash advance isn’t a loan it’s a deal. In 2016, a New York State Judge decided that for as long as the merchant cash advance is not a loan it is certainly not credit, at that point trader loan organizations aren’t liable to usury laws.

2. What is the difference between Loans and Merchant Cash Advances?

  • A cash advance is like a loan but is not actually a loan, why? because there is no need for a collateral and a massive load of paper work before money lenders will let you borrow capital. Merchant cash advance is a deal between a lender and a merchant to which he will be given a certain amount of money.
  • A business loan is  straightforward: the lender comes to agreement with the  business owner to  lend an exact amount of capital. In return the merchant agrees to payback that amount over a period of time with interest depending on how much was borrowed this tends to have a lower loan sum compared to a merchant cash advance, the only problem is traditional business loans take a long time before it gets endorsed and approved compared to merchant cash advance which only require minimal time and effort.
  • Merchant cash advance is a hassle free cash advance but bear in mind that its interest is also different from the lump sum. business owners will have to pay a portion of their sales to cover the advance sum.  this means giving the lender an access to your credit card sales.

3. Is it effective for small businesses?

  • it is effective for small businesses mainly in sustaining the financial needs of the business if ever future backlogs will occur. you’ll immediately be able to get an emergency capital of fund for you business. It also charges you monthly depending on the growth sales of your business.


Considering the numerous advantages of merchant cash advance, as it could be your best alternative to expand capital stream and fabricate a more grounded business staunch. So you won’t have to approach conventional moneylenders and do a bunch of desk work. Pick a Merchant Cash Advance to have reserves immediately stored into your record.


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