Merchant Cash Advance (MCA)
What are they?
A Merchant Cash Advance (MCA) is a type of financing where a business receives a lump sum of cash upfront in exchange for a percentage of its future sales. Unlike traditional loans, an MCA is not technically a loan; it’s a cash advance based on the credit card sales or overall revenue of the business.
Here’s how it works: The MCA provider gives the business a certain amount of money upfront. In return, the business agrees to pay back this advance by allowing the MCA provider to take a fixed percentage of its daily or weekly credit card sales until the advance is fully repaid, along with the agreed-upon fees. This percentage is known as the “holdback” and continues until the total repayment amount is met.
Since repayment is tied directly to sales, businesses with fluctuating revenue may find MCAs advantageous. Payments are higher when sales are strong and lower when sales are slow, providing some flexibility compared to traditional loans with fixed monthly payments.
How do I get one?
To qualify for a Merchant Cash Advance, businesses need to meet several requirements. Here are the key ones:
Business Revenue: The business must have a consistent flow of revenue, particularly from credit card sales, as this is what the MCA provider will use to determine eligibility and advance amounts.
Type of Business: MCAs are typically available to a wide range of businesses, particularly those in retail, hospitality, and other industries with regular credit card sales.
Time in Business: Most MCA providers require the business to have been operating for a certain period, often at least six months to a year.
Daily Credit Card Receipts: The MCA provider will review the business’s daily credit card transactions to assess the risk and determine the advance amount. The higher the volume, the more likely the business will qualify for a larger advance.
Business Bank Statements: Lenders often require a few months of bank statements to evaluate the business’s cash flow and overall financial health.
No Major Liens or Judgments: The business should not have any significant outstanding liens or judgments, as this may disqualify it from receiving an MCA.
Ability to Repay: Although the MCA is repaid through a percentage of daily sales, the provider will still evaluate whether the business is likely to generate sufficient revenue to meet the repayment terms.
Questions? You’re Covered
Most providers look for a minimum monthly revenue of $15,000 to $20,000, but this can vary.
The application process is usually quick, often with approval and funding within 24 to 48 hours.
Simply fill out our application, and one of our MCA specialists will reach out within a few hours. They will provide the full list of documents needed, which will vary case by case.