Merchant Cash Advance

What is Merchant Cash Advance?

A merchantcash advance is a type of financing that provides businesses with a lump sum of cash in exchange for a portion of their future credit card sales. The amount of the advance is based on the businesss credit card sales volume, and the repayment is made through daily or weekly withdrawals from the businesss bank account.

FINANCING PROCESS

Merchantcash advances are a type of financing that provides businesses with an upfront lump sum in exchange for a portion of their future sales. The process typically involves the business owner submitting an application to the lender, providing information about their business and its financials. The lender then evaluates the application and, if approved, provides the business with an advance in exchange for a percentage of their future credit card or debit card sales. The payments are automatically deducted from the businesss bank account on a daily or weekly basis until the advance is paid off.

Benefits of a Merchant Cash Advance

Things to Know

Merchant Cash Advance Rates and Fees

It is essential to be aware of how merchant cash advance (MCA) financing companies charge fees, as they are typically more expensive than other business loans.

Instead of an interest rate, MCA companies use a factor rate to calculate the cost of the loan. The factor rate will vary based on the company‘s assessment of the borrower‘s qualifications, and typically ranges from 1.14 to 1.48. When converted to an annual percentage rate (APR), these rates can start at 15%, but can reach as high as over 100%.

Additionally, some MCA financing companies may also charge additional fees such as an administrative fee for setting up the account. Therefore, it is important to understand all the costs associated with a merchant cash advance before agreeing to one.

Merchant Cash Advance Terms

Rather than having a set repayment period like traditional business term loans, merchant cash advances are repaid with debit and credit card sales or withdrawals from the borrower‘s bank account. This means the terms of an MCA will vary according to the amount borrowed plus fees.

On average, it takes eight or nine months to repay an MCA, but this can range from four to eighteen months depending on the business.

Paying a higher fixed percentage of sales to the financing company will result in a shorter repayment time, but also a more restricted cash flow.

Qualifications for a Merchant Cash Advance

Over $150K

ANNUAL REVENUE

550+

CREDIT SCORE

Over 2 Years

TIME IN BUSINESS

Ready to Apply?

Filthy Rich Idea makes it easy to get a merchant cash advance for your business. Apply online and our lending partner, Business Funding Now, will give you a decision within minutes. One of their Loan Specialists will tailor a loan package for your business needs. As soon as your application and documents are received, a dedicated Funding Advisor will be in touch to discuss the application and next steps if approved. Approval typically takes 24-48 hours, and funds can be deposited into your account the following business day. It’s that simple!

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FAQs

What information and documents do I need to apply for funding?

Our lending partners will need 3 months of bank statements, the government IDs of all applicants, 1 or 2 years of business tax documents, business P&L and balance sheets, business licenses and formation documents, and a business EIN.

What is APR?

APR stands for Annual Percentage Rate and is a measure of the cost of borrowing money. It is the interest rate expressed as a yearly rate, including fees and costs associated with the loan. It's a good way to gauge the overall cost of your loan and your planned repayment schedule.

How long does it take to get the money once my business is approved?

Once approved, transfer times vary depending on the lender, but it is possible to receive your capital in as little as 72 hours after approval. Lines of credit, on the other hand, may be used immediately upon receiving approval in some cases.

How do I pay back the funding amount?

Our lenders offer secure digital payment portals so that you can make your repayments on time and without penalty. You may be able to change due dates and other important information.

How To Best Prepare for a Business Loan

Determine the amount of money you will request—and do not request an excessive amount.

Although you may have the option of a small business loan, it is important to only request the amount of money that you need and can afford to pay back. This will demonstrate to your lender that you are financially responsible and increase your chances of approval.

Understand the limitations and costs of your loan.

Before committing to a loan, be sure to consider the speed, flexibility, and cost. Some loans are more or less flexible while others charge for speed. Understand the APR and other associated fees and costs so you can make an informed decision.

Avoid taking out multiple loans.

If you already have a loan, it is not advisable to take out another one. This is calledstacking loans and is generally not allowed, except in certain cases (e.g. having a business line of credit with a term loan). If you stack loans without the permission of your original lender, you could be in breach of your loan agreement and default on your first loan. Before taking on another loan, check with your lender to make sure it is allowed.

Ready to Apply?