What Is a Merchant Cash Advance?
A Merchant Cash Advance (MCA), also referred to as a business cash advance, business merchant loan, or a PDQ loan, is a versatile business finance solution. It is designed for businesses that receive payments from their customers through debit or credit cards.
With an MCA, a business can access funds that are tied to their future card payments. Essentially, it enables businesses to leverage their anticipated card revenues.
Who can get an MCA loan?
MCA loans are accessible to a wide range of businesses. To qualify, your business must meet the following criteria:
- Card Payment Acceptance: If your business accepts card payments from customers via debit or credit cards, you’re eligible for an MCA. These advances are specifically designed for businesses that rely on card transactions.
- Minimum Card Sales Volume: Lenders typically assess your average monthly card sales volume. While there’s no fixed threshold, having consistent card revenue is essential.
- Business Age: Some lenders require your business to have been operational for a minimum period (often around 6 months to a year).
- Credit Score: Unlike traditional loans, MCAs are less reliant on credit scores. Even businesses with less-than-perfect credit can be considered.
- Repayment Structure: Understand the repayment structure. MCAs involve automatic deductions from your daily card sales. If your business processes card transactions regularly, you’re a good fit.
- Industry and Purpose: MCAs are versatile, but lenders may consider the industry you operate in and the purpose of the funds. Whether you’re a retail store, restaurant, or service provider, MCAs can work for you.
How much can I borrow?
When considering an MCA loan, the borrowing amount varies based on several factors. Here are the key points to understand:
- Card Sales Volume: Lenders typically assess your average monthly card sales. The borrowing amount is often a percentage of your anticipated future card revenues. The more consistent and substantial your card transactions, the higher the potential advance.
- Business Needs: Determine how much capital your business requires. MCAs are flexible, allowing you to borrow what aligns with your specific needs. Whether it’s covering operational expenses, investing in growth, or managing cash flow, the amount can be tailored.
- Lender Policies: Each lender has its own policies. Some may offer smaller advances, while others provide more substantial funding. It’s essential to explore different lenders and find one that suits your business requirements.
What are the benefits of an MCA loan?
- Quick and Convenient: MCA loans are quick and easy to arrange. They’re especially popular among SMEs looking for a convenient way to manage cash flow.
- Cash Flow Boost: Need an instant cash injection? An MCA provides the flexibility to access funds swiftly, often within 48 hours.
- No Fixed Monthly Repayment: Unlike traditional loans, MCA repayments are tied to your card sales. There’s no fixed monthly amount, making it adaptable to your business’s revenue fluctuations. Repayments are taken automatically from daily card sales. As your business processes card transactions, a percentage of those sales goes toward repaying the advance.
- Versatile Use: Use the funds for various purposes:
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- Pay employees, suppliers, and other creditors.
- Purchase equipment or vehicles.
- Expand your business operations.
- Invest in advertising campaigns.
Merchant cash advances are a powerful tool for businesses that rely on card payments. Whether you’re a retail business or part of the hospitality and leisure sector, Newable Finance can help you gain access to the funding you need.
About Newable
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