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HomeFinance and AccountingBusiness FinancingWhat Is A Merchant Cash Advance For A Business?

What Is A Merchant Cash Advance For A Business?

Photo by Sharon McCutcheon on Unsplash

If you have heard about merchant cash advances but are unsure as to what they are, or how they might be able to benefit your business, you are in luck. We have broken down some of the key pieces of information surrounding merchant cash advances, so you can make an informed decision when you next apply for any form of funding to help your business. Follow this guide and find out all there is about merchant cash advances and help your business excel more than ever before.

What is a Merchant Cash Advance?

Essentially, a merchant cash advance is a form of business funding, designed to specifically help business gain access to much needed cash in a flexible manner. The lender will provide the business with a cash advance, which is then paid back as a percentage through each card payment a customer makes to the business.  Any business with aa card terminal is eligible to apply for a merchant cash advance, allowing for a flexible form of lending for those with a limited credit score or few assets, who need capital immediately for business growth.

How do They Work?

A merchant cash advance is a fairly straightforward process. The business, often referred to as “the merchant” will borrow a sum of money from a lender. Following this, the lender will work with the terminal provider to pay the lender back through an agreed percentage of each card payment. Unlike loans from direct lenders or bank loans, no credit check will be required to apply or receive a merchant cash advance. How much you are able to borrow from a merchant cash advance depends on your annual turnover, as well how affordable you are in the eyes of the lender, which will be assessed differently by each merchant cash advance lender.

Who Can Get a Merchant Cash Advance?

As long as your business has a card terminal in which you take customer payments, you will be eligible for a merchant cash advance.  This is because it will allow the lender of the merchant cash advance to have visibility in regard to how much you as a business make each month on average through these card payments.

This can prove as a great solution for businesses with no assets but need access to funding immediately.

Is a Merchant Cash Advance Right for Me?

Merchant cash advances have the ability to provide you and your business with money exceptionally quickly. Many decisions from lenders of merchant cash advances are made within just 24 hours, meaning you can receive the cash you need to progress as a business the very next day. Lenders often take weeks to make their decision for their loans, making a merchant cash advance preferable for many business owners who require funding now.

Merchant cash advances are one out of many solutions that can either help your business grow or get back on track. Always ensure you are borrowing from a trusted lender when opting for merchant cash advances and do your research to ensure it is the most viable option for your and your business requirements.

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